United States Government Accountability Office
Report to Congressional Committees
May 2013
HUMAN CAPITAL
Additional Steps
Needed to Help
Determine the Right
Size and Composition
of DOD’s Total
Workforce
GAO-13-470
May 2013
HUMAN CAPITAL
Highlights of GAO-13-470, a report to
congressional committees
Additional Steps Needed to Help Determine the
Right Size and Composition of DOD's Total
Workforce
Why GAO Did This Study
What GAO Found
The federal government’s growing
fiscal challenges underscore the
importance of DOD employing a
strategic approach to determining the
appropriate mix of its military, civilian,
and contractor personnel to perform its
mission, and determining the functions
that are critical for the department to
achieve its missions. A committee
report accompanying the National
Defense Authorization Act for Fiscal
Year 2013 directed GAO to assess the
measures DOD is taking to balance its
workforce against its requirements.
GAO examined (1) historical and
projected workforce trends, (2) the
actions DOD has taken to determine
an appropriate workforce mix, (3) the
analysis DOD performs to identify core
or critical functions, and (4) how DOD
used its inventory of contracted
services to inform budget submissions.
GAO performed trend analysis to
determine historical and future
workforce levels. GAO also reviewed
relevant statutes, DOD and military
department guidance, and budgetary
submissions, and interviewed officials
from DOD and the Office of
Management and Budget (OMB).
Since fiscal year 2001, the Department of Defense’s (DOD) military and civilian
workforces peaked in fiscal year 2011 at 3.1 million personnel combined, and is
projected to decrease over the next five years to below the fiscal year 2001 level
of 2.9 million. Comparable historical data on DOD’s contractor workforce are not
available. In fiscal year 2011, DOD reported that it contracted for services
performed by an estimated 710,000 contractor full time equivalents (FTEs)—a
workforce equal to about 90 percent of the size of DOD’s civilian workforce of
807,000 FTEs. Using fiscal year 2013 constant dollars, GAO’s analysis of DOD
spending on contracted services shows obligations peaked in fiscal year 2010 at
about $195 billion, more than twice the amount spent in fiscal year 2001. This
spending decreased to about $174 billion in fiscal year 2012.
What GAO Recommends
GAO recommends that DOD revise its
policies and procedures to incorporate
(1) legislative requirements for
workforce planning and (2) federal
requirements for the identification of
critical functions. GAO also
recommends that DOD provide better
information regarding contractor FTEs
used in budget submissions. DOD
noted actions that it has underway or
planned to respond to these
recommendations.
View GAO-13-470. For more information,
contact Brenda S. Farrell at (202) 512-3604 or
farrellb@gao.gov or Timothy J. DiNapoli at
(202) 512-4841 or dinapolit@gao.gov
DOD has taken some steps to improve its understanding and management of its
total workforce; however, several shortcomings remain. Specifically, DOD has
yet to assess the appropriate mix of its military, civilian, and contractor personnel
capabilities in its strategic workforce plan as required by law. Further, DOD has
not updated its policies and procedures to reflect current statutory requirements
to use its civilian strategic workforce plan and the inventory of contracted
services to determine the appropriate mix of personnel to perform DOD’s
mission. Moreover, DOD’s strategic human capital plan does not contain certain
required elements and information and several factors limit the accuracy of its
inventory of contracted services. As a result, the department is hampered in
making more informed strategic workforce mix decisions, which is crucial to
meeting DOD’s congressional mandate to manage its total workforce.
Although DOD is not required to perform analysis to identify a list of core or
critical functions across the department as a whole, DOD has identified broad
core mission areas of the department. However, its current policies do not fully
reflect federal policy concerning the identification of critical functions. Office of
Federal Procurement Policy Policy Letter 11-01 requires agencies to identify and
ensure that they retain control over critical functions that are core to the agency’s
mission, but may be contracted out to the private sector. DOD’s policies and
procedures predate the publication of this requirement, and consequently contain
no reference to it. Absent specific policies and procedures on this process, DOD
may lack assurance that it retains enough government employees to maintain
control over these important functions.
DOD components used various methods and data sources, including their
inventories of contracted services, to estimate contractor FTEs for budget
submissions, but GAO’s analysis found that the contractor FTE estimates have
significant limitations and do not accurately reflect the number of contractors
providing services to DOD. Components encountered challenges, to include the
use of estimating techniques based on inventory data that may not be accurate
and the lack of a crosswalk between the inventory and specific budget codes.
While the Army has a process that addresses these challenges, it may be
several years before the remaining DOD components are able to do the same.
DOD is taking steps to help the remaining components address these
challenges, but, in the meantime, the budget does not provide an explanation of
how the contractor FTE estimates are derived and what limitations apply.
United States Government Accountability Office
Contents
Letter
1
Background
DOD Projects Its Military and Civilian Workforce to Decrease, but
Comparable Data on DOD’s Contractor Workforce Are Not
Available
DOD Has Taken Some Steps Useful for Determining the
Appropriate Mix of Its Workforce, but Shortcomings Remain
DOD Defines the Core Missions of the Department, but Current
Policy Does Not Fully Reflect the Need to Identify Critical
Functions
DOD Components Used the Inventory of Contracted Services and
Other Data in Budget Submissions, but the Projections Have
Significant Limitations
Conclusions
Recommendations for Executive Action
Agency Comments and Our Evaluation
8
15
28
36
39
46
47
47
Appendix I
Recent GAO Recommendations for DOD’s Strategic Workforce
Management
52
Appendix II
Scope and Methodology
54
Appendix III
Comments from the Department of Defense
57
Appendix IV
GAO Contacts and Staff Acknowledgments
60
Tables
Table 1: Numbers and Percentages of Active Component, Reserve
Component, and Civilian Workforce Changes from Fiscal
Year 2001 to Fiscal Year 2011 and Projected Numbers and
Percentages from Fiscal Year 2012 to Fiscal Year 2017
(workforce numbers in thousands)
Table 2: Percentage of Active Component End Strength and
Civilian Full Time Equivalent (FTE) Growth and Decline
Page i
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GAO-13-470 Defense Workforce
from Fiscal Year (FY) 2001 to Fiscal Year 2011 by Force
and Infrastructure Category
Table 3: Estimated Number of Contractor Full Time Equivalents
(FTE) and Obligations as Reported in DOD’s Inventory of
Contracted Services
Table 4: Processes Used to Develop Contractor Full Time
Equivalent (FTE) Projections in Fiscal Year 2013 Budget
Submissions
25
26
43
Figures
Figure 1: DOD’s Reported Number of Active Component End
Strength, Reserve Component End Strength, Civilian Full
Time Equivalents (FTE), and Contractor FTEs, Fiscal
Year 2011
Figure 2: Active and Reserve Components End Strength and
Civilian Full Time Equivalents (FTE), Fiscal Years 2001
through 2017
Figure 3: Obligations for Contracted Service Actions, Fiscal Years
2001 through 2014
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9
17
27
GAO-13-470 Defense Workforce
Abbreviations
CAPE
CIS
CMRA
DAWDF
DISA
DLA
DOD
FAIR Act
FPDS-NG
FTE
FYDP
OFPP
OSD
SAMAS
Cost Assessment and Program Evaluation
Comptroller Information System
Contractor Manpower Reporting Application
Defense Acquisition Workforce Development Fund
Defense Information Systems Agency
Defense Logistics Agency
Department of Defense
Federal Activities Inventory Reform Act of 1998
Federal Procurement Data System – Next Generation
Full time equivalent
Future Years Defense Program
Office of Federal Procurement Policy
Office of the Secretary of Defense
Structure and Manpower Allocation System
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GAO-13-470 Defense Workforce
441 G St. N.W.
Washington, DC 20548
May 29, 2013
The Honorable Carl Levin
Chairman
The Honorable James M. Inhofe
Ranking Member
Committee on Armed Services
United States Senate
The Honorable Howard P. “Buck” McKeon
Chairman
The Honorable Adam Smith
Ranking Member
Committee on Armed Services
House of Representatives
The Department of Defense (DOD) is one of the largest and most
complex organizations in the federal government, and it is consequently
one of the nation’s largest employers. DOD’s total workforce consists of
three main components: military personnel (including the active military
and the reserve and guard forces 1), civilians, and contractors providing
support to the department. For fiscal year 2012, DOD budgeted for a
military workforce of about 2.3 million active and reserve servicemembers
and a civilian workforce of about 800,000 full time equivalents (FTEs), 2
including foreign nationals and indirect hires. The active military and
reserve and guard forces are charged with implementing the National
Military Strategy and performing military essential functions in support of
DOD’s various missions. DOD’s civilian workforce performs a wide variety
of responsibilities, including providing care for active duty personnel, their
dependents, and wounded servicemembers; managing financial
accounting systems; and providing mission-essential combat-support
functions that traditionally have been performed by the uniformed military,
such as logistics support, maintenance, and carrying out cyber and
1
Within DOD’s military personnel component of its total workforce, the reserve and guard
forces are comprised of the Army, the Navy, the Marine Corps, and the Air Force reserves
and the Army and Air Force National Guards.
2
An FTE is a standard measure of labor that equates to one year of full-time work (labor
hours as defined by the Office of Management and Budget Circular A-11 each year).
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GAO-13-470 Defense Workforce
intelligence efforts. In addition, a key component of this workforce also
provides deployable civilian experts to Afghanistan and other theaters of
operation. Augmenting the military and civilian workforces, DOD has
increasingly relied on contractors both overseas and in the United States
to perform many of the same functions as civilian employees, including
management support, communication services, interpreters who
accompany military patrols, base operations support (e.g., food and
housing), weapon systems maintenance, and intelligence. In its inventory
of contracted services, DOD reported that it spent about $145 billion for
contracted services in fiscal year 2011, provided by an estimated 710,000
contractor FTEs. 3 DOD’s workforce management is governed by a
complex statutory and regulatory framework, and each component of
DOD’s total workforce is governed by different rules that direct how the
department manages its total workforce.
Presently, at the end of a decade that has seen two wars and growth in
DOD’s costs for military and civilian personnel as well as contracted
services, DOD faces increasing competition for resources as the federal
government confronts growing fiscal challenges. For example, we
previously reported that in fiscal year 2012, DOD budgeted approximately
$72 billion for its civilian personnel 4, an increase of approximately $12.6
billion, or 21 percent, since fiscal year 2002. 5 In 2011, we reported that
the active duty total compensation costs increased 32 percent from about
$143.8 billion in fiscal year 2000 to about $189.4 billion in fiscal year
2008, and that the federal government’s total estimated compensation for
reserve and national guard members grew over 31 percent from about
3
DOD is required to annually compile an inventory of contracted services, pursuant to 10
U.S.C § 2330a, to include, among other data, the functions performed, the number of
contractor FTEs performing the function, and the total dollar amount of the services
purchased. For fiscal year 2011, we note that obligations reported for contracted services
in budget justification materials and obligations reported in the inventory of contracted
services differ. We have previously reported that a number of factors limit the accuracy
and completeness of the inventory data, see, for example, GAO, Defense Acquisitions:
Further Actions Needed to Improve Accountability for DOD's Inventory of Contracted
Services, GAO-12-357 (Washington, D.C.: Apr. 6, 2012).
4
Civilian personnel include foreign nationals, which can be hired directly by DOD or
indirectly hired under agreement or contract with foreign governments to provide personal
services to the United States government
5
GAO, Human Capital: Critical Skills and Competency Assessments Should Help Guide
DOD Civilian Workforce Decisions, GAO-13-188 (Washington, D.C.: Jan. 17, 2013).
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$17.8 billion in fiscal year 2001 to nearly $23.5 billion in fiscal year 2008. 6
Further, DOD’s obligations for contracted services more than doubled
from fiscal years 2001 to 2009. 7 The sequestration as a result of the
Budget Control Act of 2011 8 requires spending cuts in fiscal year 2013
totaling about $40 billion through across-the-board, proportional
reductions in funding provided in the appropriations acts for most defense
accounts, including accounts related to DOD’s civilian workforce and
contracted services. To prepare for the sequestration, the Secretaries of
the Military Departments issued guidance in January 2013 to their
respective departments to direct actions intended to reduce costs.
Further, section 955 of the National Defense Authorization Act for Fiscal
Year 2013 9 calls for the Secretary of Defense to develop an efficiencies
plan to achieve savings in funding for contractor and civilian workforces
commensurate with the savings in military pay due to currently planned
reductions to active duty end strength.
The current and long-term future fiscal pressures facing DOD underscore
the importance of a strategic approach to recruit, develop, and retain the
right number of individuals with the necessary skills and competencies for
DOD to meet its mission and contract for services where appropriate.
While progress has been made since we first placed strategic human
capital management on our high risk list in 2001 10—for example, through
the various authorities and flexibilities provided to agencies for managing
the federal workforce—this area remains one of significant concern. As
we noted in February 2013, strategic human capital management in DOD
and across the federal government continues to be a GAO high-risk area
because critical skill and competency gaps could undermine agencies’
abilities to accomplish their missions. 11 Current budget and long-term
6
GAO, Opportunities to Reduce Potential Duplication in Government Programs, Save Tax
Dollars, and Enhance Revenue, GAO-11-318SP (Washington, D.C.: Mar. 1, 2011). Both
estimates used fiscal year 2008 constant dollars.
7
GAO, Defense Acquisitions: Further Action Needed to Better Implement Requirements
for Conducting Inventory of Service Contract Activities, GAO-11-192 (Washington, D.C.:
Jan. 14, 2011).
8
Pub. L. No. 112-25 (2011) as amended.
9
Pub. L. No. 112-239, § 955 (2013).
10
GAO, High-Risk Series: An Update, GAO-01-263 (Washington, D.C.: January 2001).
11
GAO, High-Risk Series: An Update, GAO-13-283 (Washington, D.C.: February 2013).
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GAO-13-470 Defense Workforce
future fiscal pressures coupled with a potential wave of employee
retirements could produce gaps in leadership and institutional knowledge
that may threaten the government’s capacity to effectively address
complex challenges. Strategic human capital planning that is integrated
with broader organizational strategic planning is essential for ensuring
that agencies have the talent, skills, and experience they need to costeffectively execute their current and future mission and program goals.
Specifically, with regard to DOD, our work has emphasized that effective
planning can enable the department to have the right people, with the
right skills, doing the right jobs, in the right places, at the right time by
making flexible use of its military and civilian workforces and appropriate
use of contractors. 12
Two key aspects of DOD’s implementation of total force management are
determining the appropriate mix of its military, civilian, and contractor
workforces and determining the functions that are critical for the
department to achieve its missions. Congress has taken many steps to
help ensure DOD appropriately manages its total workforce, and has
passed legislation requiring DOD to conduct human-capital planning
efforts for its civilian workforce. Specifically, since 2006, legislation has
required DOD to periodically develop and submit to congressional
defense committees a strategic workforce plan to shape and better
manage the department’s civilian workforce. 13 Further, legislation
encouraged DOD to take a more holistic approach to its workforce
requirements to achieve the appropriate balance, using all three
components—military, civilian, and contractor—of its total workforce, and
prioritize the achievement of a workforce sufficiently sized and of the
appropriate mix to carry out DOD’s mission over cost. 14 Congress has
also enacted new requirements and amended existing DOD workforce
planning legislation to require inclusion of contracted services information
in DOD’s total force planning efforts. The background section of this
report provides an overview of these requirements, as well as other
12
GAO, DOD Civilian Workforce: Observations on DOD’s Efforts to Plan for Civilian
Workforce Requirements, GAO-12-962T (Washington, D.C.: July 26, 2012).
13
The National Defense Authorization Act for Fiscal Year 2010, Pub. L. No. 111-84, §
1108 (2009) (codified as amended at 10 U.S.C. §115b) codified a previous strategic
workforce plan requirement that was originally enacted by section 1122 of the National
Defense Authorization Act for Fiscal Year 2006, Pub. L. No. 109-163 (2006).
14
10 U.S.C. §129a.
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relevant legislation, requirements, and guidance that directs DOD to take
steps regarding its strategic workforce management. Additionally, we
have made a series of recommendations to DOD to better manage its
total workforce and improve its strategic workforce plan. Appendix I lists
our recent relevant recommendations made to DOD.
A committee report accompanying a bill for the National Defense
Authorization Act for Fiscal Year 2013 directed GAO to assess DOD’s
efforts to appropriately balance its current and future workforce structure
against its requirements. 15 In this report, we examine: (1) the historical
trends of the levels of military, civilian, and contractor personnel and the
future projected trends for DOD’s workforce in light of shifts in
departmental priorities; (2) the extent to which DOD has taken action to
determine the appropriate workforce mix necessary to accomplish its
mission; (3) the extent to which DOD conducts analysis to identify core or
critical functions of the department; and (4) how the military departments
and defense agencies used the inventory of contracted services to inform
their fiscal year 2013 and 2014 budget submissions.
To examine the historical and projected trends of the levels of military,
civilian and contractor personnel in light of shifts in departmental
priorities, we obtained data on active component end strength; the
selected reserve within the reserve component end strength; 16 and
civilian personnel FTEs, including foreign nationals and indirect hires; 17
and performed trend analysis on this data from fiscal year 2001 to fiscal
year 2017. We relied on data from DOD’s fiscal year 2013 Future Years
Defense Program (FYDP), the Comptroller Information System (CIS) from
the Office of the Under Secretary of Defense, Comptroller, and other
DOD budget documents. We determined that these data, collectively,
were sufficiently reliable for use in discussing historical and future trends
15
H.R. Rep. No. 112-479 (2012).
16
For the reserve component, we included servicemembers from the Selected Reserve
and excluded certain categories such as the Individual Ready Reserve and Inactive
National Guard.
17
According to DOD’s glossary of workforce terms, foreign national employees are local
citizens of the host country or citizens of a third country. Foreign nationals can be direct or
indirect hires. Direct hired employees are hired directly by an agency of DOD. Indirect hire
civilians are foreign nationals assigned to support U.S. forces through contracts or
agreements with foreign governments (or agencies thereof). These personnel are
employees of the foreign governments involved.
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of the military and civilian workforces. We assessed the reliability of the
data by comparing the data against other available data sources,
conducting electronic testing of the data, and discussing any limitations of
the data with appropriate DOD officials. DOD does not have comparable
information on DOD’s contractor workforce, but to determine the size of
the contractor workforce, we obtained estimates of contractor FTEs from
DOD’s inventory of contracted services from fiscal year 2008 to fiscal
year 2011. To report on obligated dollars for contracted services, we
reviewed the obligated dollars for contracted services from fiscal year
2001 to fiscal year 2012 and the projected obligations for contracted
services from fiscal year 2013 to fiscal year 2014. We relied on budget
data on obligations for contracted services. Based on discussions with
appropriate DOD officials and our comparison of the trends in the budget
data against other data sources, we believe the contracted service
obligation data are sufficiently reliable to serve as context of overall
trends for contracted services. In addition, we interviewed officials from
the Office of the Secretary of Defense (OSD) and military services
regarding how shifts in departmental priorities are expected to impact
workforce requirements.
To determine the extent to which DOD has taken action to determine the
appropriate workforce mix to accomplish its mission, we reviewed
relevant legislation that governs DOD total workforce management and
departmental guidance concerning requirements for DOD to carry out
such an assessment. 18 We also interviewed OSD and military service
officials to assess the actions DOD has taken to ensure it is employing
the appropriate workforce mix. Specifically, we discussed the process
DOD uses to determine which sector of the workforce should perform a
given task based on the nature of the work involved, DOD’s process for
identifying mission critical occupations as part of its strategic workforce
planning process, and efforts by the services to improve their total
workforce management in the future. We reviewed selected statutory
requirements concerning the processes by which DOD is to determine its
appropriate workforce mix. We then compared these requirements to the
department’s efforts to date, and noted any differences.
18
10 U.S.C. §115b.
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To determine the extent to which DOD conducts analysis to identify core
and critical functions, we reviewed relevant legislation 19 and federal policy
and other guidance that requires the identification of inherently
governmental and critical functions, including the Office of Federal
Procurement Policy Policy Letter 11-01. 20 Further, we reviewed
departmental guidance concerning the need and process for identifying
critical functions. We interviewed OSD and military service officials to
determine the actions DOD has taken to define core or critical functions
and respond to these requirements. Additionally, we met with officials
from the Office of Federal Procurement Policy within the Office of
Management and Budget to discuss their views on DOD’s implementation
of those requirements contained in the 2011 policy letter regarding critical
functions. We compared federal policy concerning the identification of
critical functions to DOD’s efforts to date, and noted any differences.
To determine how the military departments and defense agencies used
the inventory of contracted services to inform their fiscal year 2013 and
2014 budget submissions, we focused our efforts on five DOD
components—the departments of the Army, the Navy, and the Air Force,
the Defense Logistics Agency (DLA), and the Defense Information
Systems Agency (DISA). We selected these components based on the
amount of their obligations for contracted services and the large number
of contractor FTEs they identified in their fiscal year 2011 inventory of
contracted services, the most current inventory available at the time of
our review. We reviewed relevant guidance that directed the DOD
components on how to use the inventory of contracted services to provide
contractor FTE information in their budget submissions for fiscal years
2013 and 2014. We also interviewed DOD officials regarding the
guidance and ongoing initiatives intended to improve the accuracy of the
inventory data to inform future budget submissions. In addition, we
interviewed relevant budget and manpower officials from the five
components we included in our review regarding the use of their
inventories in the development of their fiscal year 2013 and 2014 budget
submissions, and we obtained corroborating documentation from the
three components that could provide it to determine the processes used
19
10 U.S.C. §129a.
20
Office of Federal Procurement Policy Policy Letter 11-01, Performance of Inherently
Governmental and Critical Functions (Sept. 12, 2011).
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to develop contractor FTE information included in these budget
submissions.
We conducted this performance audit from October 2012 to May 2013 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives. A more in depth discussion of
our scope and methodology appears in appendix II of this report.
Background
DOD’s total workforce is made up of three main components: military
personnel (including the active military and the reserve and guard forces),
DOD civilian employees 21, and contractor support. Figure 1 shows the
number of the active and reserve components of the military, civilians,
and estimated contractor FTEs that comprised DOD’s total workforce in
fiscal year 2011.
21
Civilian personnel include foreign nationals, which can be hired directly by DOD or
indirectly hired under agreement or contract with foreign governments to provide personal
services to the United States government.
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Figure 1: DOD’s Reported Number of Active Component End Strength, Reserve
Component End Strength, Civilian Full Time Equivalents (FTE), and Contractor
FTEs, Fiscal Year 2011
Notes:
a
Active component end strength includes Army, Navy, Marine Corps, and Air Force servicemembers
as of the end of fiscal year 2011.
b
The reserve component end strength includes the approximately 772,000 part-time and the
approximately 76,000 full-time Army Reserve, Navy Reserve, Marine Corps Reserve, Air Force
Reserve, Army National Guard and Air National Guard servicemembers in the selected reserve as of
the end of fiscal year 2011. The reported reserve component end strength does not include the
Individual Ready Reserve or the Inactive National Guard.
c
Civilian FTEs is an estimate of full time direct hires, indirect hires, and foreign nationals for fiscal year
2011. Foreign nationals account for about 49,000, or 6 percent of the civilian workforce.
d
Dual status technicians are included in both the selected reserve part-time end strength and the
civilian FTEs.
e
The number of contractor FTEs is DOD’s estimate based on data reported in its inventory of
contracted services for fiscal year 2011.
Over the last decade, Congress has enacted or amended several laws
that govern DOD’s management of its total workforce. These
interconnected provisions provide a framework for DOD total workforce
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management that requires DOD to adopt and enforce specific policies. In
addition to those policy requirements, DOD is also required to submit
information to Congress about its workforce and workforce planning,
including, among other things, a strategic plan for shaping its civilian
workforce, an annual inventory of contracted services and budget
justification information concerning its contractor workforce. Other
provisions govern the overall composition of DOD’s workforce, and
outline the circumstances under which it is appropriate to convert
performance of functions from one of the three workforce components to
another. This section provides a high level overview of selected relevant
provisions, as well as the major responsibilities regarding workforce
management assigned to departmental leadership and organizations.
•
10 U.S.C. § 129a governs DOD’s general policy for total force
management and was significantly amended in December of 2011.
Section 129a now requires the Secretary of Defense to establish
policies and procedures for determining the most appropriate and cost
efficient mix of military, civilian, and contractor personnel to perform
the mission of the department. These policies and procedures are
required to clearly provide that attainment of a DOD workforce
sufficiently sized and comprised of the appropriate mix of personnel
necessary to carry out the mission of the department and the core
mission areas of the armed forces takes precedence over cost. The
law also specifies that these procedures shall specifically require DOD
to use, among other things, the civilian strategic workforce plan (see
10 U.S.C. § 115b below) and the inventory of contracted services (see
10 U.S.C. § 2330a below) when making determinations regarding the
appropriate workforce mix.
•
10 U.S.C. § 115b requires the biennial submission of a strategic
workforce plan to shape and improve DOD’s civilian workforce.
Among other things, the plan is required to address the appropriate
mix of military, civilian, and contractor personnel capabilities, a
requirement that DOD’s plan submissions have not addressed to
date. 22
•
10 U.S.C. § 2330a requires the Secretary of Defense to submit an
annual inventory of activities performed pursuant to contracts for
22
GAO, Human Capital: DOD Needs Complete Assessments to Improve Future Civilian
Strategic Workforce Plans, GAO 12-1014 (Washington, D.C.: Sept. 27, 2012).
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services, which, among other things, is required to include information
concerning the number of contractor employees, expressed as fulltime equivalents, subject to certain exceptions. Section 2330a also
requires that the DOD component heads perform a review of the
contracts and activities in the inventory to ensure that the activities on
the list do not include inherently governmental functions or illegal
personal services contracts, and, to the maximum extent practicable,
do not include functions closely associated with inherently
governmental functions. 23 The inventory is also to be used to identify
additional categories of functions for possible conversion to civilian
performance pursuant to 10 U.S.C. § 2463 (below). Additionally,
section 2330a requires DOD component heads to develop a plan,
including an enforcement mechanism and approval process, to use
the inventory to implement 10 U.S.C. § 129a (above), to inform
strategic workforce planning, such as the plan required by 10 U.S.C. §
115b (above), to facilitate the use of the inventory in the submission of
budgetary information in compliance with 10 U.S.C. § 235 (below),
and to perform conversions identified during the review described
above.
•
10 U.S.C. § 2463 requires the Secretary of Defense make use of the
inventory of contracted services, compiled pursuant to 10 U.S.C. §
2330a (above), for the purpose of identifying certain functions
performed by contractors, to include closely associated with inherently
governmental functions, critical functions and acquisition workforce
functions, that should be given special consideration for conversion to
civilian performance.
23
Inherently governmental functions are defined by law as functions that are so intimately
related to the public interest as to require performance by federal government employees.
Federal Activities Inventory Reform (FAIR) Act of 1998, Pub. L. No 105-270, § 5 (1998)
(appended as a note below 31 U.S.C. § 501). There is currently an open Federal
Acquisition Regulation case (2012-001) under consideration to implement a September
2011 Office of Federal Procurement Policy Policy Letter that, among other things, clarified
the definition of “inherently governmental function” (consistent with the FAIR Act
definition). Office of Federal Procurement Policy, Policy Letter 11-01, Performance of
Inherently Governmental and Critical Functions (Sept. 12, 2011). In addition, closely
associated with inherently governmental functions are those that while not inherently
governmental, may approach the category because of the nature of the function, the
manner in which the contractor performs the contract, or the manner in which the
government administers performance under a contract. Federal Acquisition Regulation §
7.503(d) provides examples of such functions.
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GAO-13-470 Defense Workforce
•
10 U.S.C. § 235 requires that the Secretary of Defense include (in the
budget justification materials submitted to Congress) information that
clearly and separately identifies both the amount requested for the
procurement of contract services for each DOD component,
installation, or activity and the number of contractor FTEs projected
and justified for each DOD component, installation, or activity based
on the inventory of contracts for services and the statutorily required
reviews of the inventory data (see 10 U.S.C. § 2330a and 10 U.S.C. §
2463 above).
Following DOD’s fiscal year 2010 announcement of its efficiency
initiatives (including a cap on its civilian workforce FTEs at fiscal year
2010 levels), 24 and in light of the planned drawdown of military personnel,
Congress enacted two additional provisions that shape the composition of
DOD’s total workforce.
•
Section 808 of the National Defense Authorization Act for Fiscal
Year 2012 (Pub. L. No. 112-81 (2011)) requires, among other things
and subject to certain exceptions, that the total amount obligated by
DOD for contract services in fiscal years 2012 and 2013 may not
exceed the total amount requested for contract services in the fiscal
year 2010 President’s budget. The fiscal year 2010 president’s budget
was the baseline DOD used in developing its civilian workforce cap;
the effect of this provision is to provide a parallel cap on contracted
services working from a similar baseline. 25
•
Section 955 of the National Defense Authorization Act for Fiscal
Year 2013 (Pub. L. No. 112-239 (2013)) requires the Secretary of
Defense to, among other things, develop an efficiencies plan for the
civilian and contract workforces. The plan is required to achieve
savings in the total funding of those workforces not less than savings
achieved for basic military personnel pay from reductions in end
strength over the same period of time, subject to certain exceptions.
Among these exceptions are expenses for personnel performing
24
The initial cap announced in 2010 was directed to the Office of the Secretary of Defense
and other headquarters commands. In fiscal year 2011, the cap was extended to include
military departments.
25
The two caps are not directly comparable because section 808 limits DOD’s
expenditures for contracted services, whereas the civilian cap was focused on the number
of civilian FTEs, not expenditures.
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critical functions identified by the Secretary of Defense as requiring
exemption in the interest of the national defense.
Additionally, there is a body of guidance that relates to determining what
work should be performed by each sector of the total DOD workforce,
including an Office of Federal Procurement Policy Letter, and several
DOD guidance documents. These documents, collectively, require that
migration of work between DOD’s three workforce components be
supported by analysis, and provide when the relevant components should
be considered for performing new requirements.
•
Office of Federal Procurement Policy Policy Letter 11-01: This
policy letter, among other things, (1) clarifies what functions are
inherently governmental, (2) explains how agencies must manage
work that is “closely associated” with inherently governmental
functions, and (3) requires agencies to identify “critical functions” to
ensure that they have enough internal capability to retain control over
functions that are core to the agency’s mission and operations.
•
DOD Directive 1100.4: This directive outlines manpower
requirements determination noting that national military objectives
shall be accomplished with a minimum of manpower that is organized
and employed to provide maximum effectiveness and combat power.
It requires that military (active and reserve) and civilian manpower
resources be programmed in accordance with validated manpower
requirements, and within fiscal limits and acceptable levels of risk
identified in defense planning and programming guidance.
•
DOD Instruction 1100.22: This instruction outlines DOD policy and
procedures for determining the appropriate mix of manpower (military
and civilian) and private sector support (contractors).
•
DOD Directive Type Memorandum 09-007: Provides business rules
for use in estimating and comparing the full costs of military and DOD
civilian manpower and contract support. It requires components to use
certain business rules when performing an economic analysis in
support of workforce decisions, which include determining the
workforce mix of new or expanding mission requirements that are not
inherently governmental or exempt from private-sector performance. 26
26
This is the subject of another, ongoing, GAO review in response to a mandate in the
conference report accompanying the National Defense Authorization Act for Fiscal Year
2013.
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10 U.S.C. §§ 2461 and 2463 and OMB circular A-76 are also relevant
to the subject of transitions between workforce types, depending on
the type of transition.
Collectively, this body of law and guidance requires DOD to collect a
variety of information for its decision makers to review and use in making
strategic workforce management decisions. These requirements are
especially significant in light of the current and long-term future fiscal
pressures facing DOD, which will require identification of all of those
functions currently being performed by each workforce sector,
prioritization of those functions, and strategic determinations as to
whether the performance of functions is appropriately distributed across
these three sectors.
Several offices have responsibility for implementing these laws and
regulations and managing the department’s total workforce. The Office of
the Under Secretary of Defense, Personnel and Readiness (USD, P&R),
has overall responsibility for issuing guidance on manpower management
to be used by the DOD components, providing guidance on manpower
levels of the components, and developing manpower mix criteria and
other information to be used by the components to determine their
workforce mix. The Under Secretary of Defense (Comptroller) and the
Director, Cost Assessment and Program Evaluation (CAPE) play key
roles in determining the amounts budgeted for military and civilian
personnel, as well as contracted services. The Under Secretary of
Defense (Comptroller) is responsible for ensuring that the budget for DOD
is consistent with the total force management policies and procedures. 27
The Secretaries of the military departments and heads of the defense
agencies have overall responsibility for the requirements determination,
planning, programming, and budgeting for total force management
policies and procedures, 28 as well as having numerous responsibilities
related to manpower management as detailed in DOD guidance. 29 For
example, they are responsible for designating an individual with full
authority for manpower management including: (1) implementing fiscal
year guidance and manpower management policy within their respective
27
10 U.S.C. § 129a(c)(4).
28
10 U.S.C. § 129a(c)(2).
29
See e.g. Department of Defense Directive 1100.4, Guidance for Manpower
Management (Feb. 12, 2005).
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GAO-13-470 Defense Workforce
component, (2) ensuring manpower levels are programmed to optimize
readiness, (3) developing annual manpower requests for Congress,
including the consideration of converting from one form of manpower to
another, (4) conducting continuous review of manpower utilization plans
and programs, and (5) establishing and maintaining manpower data
systems that account for all manpower resources.
DOD Projects Its
Military and Civilian
Workforce to
Decrease, but
Comparable Data on
DOD’s Contractor
Workforce Are Not
Available
DOD’s data shows that since fiscal year 2001, its combined active,
reserve, and civilian workforce peaked in fiscal year 2011 at 3.1 million
personnel, and is projected by DOD to gradually decrease over the next
five years to below its fiscal year 2001 level. 30 Comparable historical data
on the contractor component of DOD’s total workforce are not available,
in part because DOD was not required to compile an annual inventory of
activities performed pursuant to contracts for services until 2008. In its
inventory for fiscal year 2011, DOD reported that about 710,000
contractor FTEs were performing various functions under contracts for
services—which is equal to about 90 percent of the size of DOD’s civilian
workforce of 807,000 FTEs for that same fiscal year. Our analysis of
DOD’s obligations for contracted services using fiscal year 2013 constant
dollars shows DOD’s spending peaked in fiscal year 2010 at about $195
billion, more than twice the amount spent in fiscal year 2001. Such
spending decreased to about $174 billion in fiscal year 2012.
DOD’s Military and Civilian
Workforce Peaked in
Fiscal Year 2011, but Is
Projected by DOD to
Decrease
Our analysis of DOD’s military and civilian workforce data indicates that
the collective growth in DOD’s military and civilian workforce peaked in
fiscal year 2011 and is projected by DOD to gradually decrease over the
next five years to below its fiscal year 2001 level, which was about 2.9
million servicemembers and DOD civilians combined. In fiscal year 2011,
DOD’s military and civilian workforce totaled about 3.1 million
servicemembers and civilians, or about 139,000 more than fiscal year
2001, with the most growth occurring within the civilian workforce.
Specifically, in fiscal year 2011, DOD’s civilian workforce numbered about
807,000 FTEs, an increase of 17 percent or 120,000 FTEs over fiscal
30
For purposes of this report, military workforce represents the end strength of the active
components and the selected reserve in the reserve components. Civilian workforce is
represented by civilian FTEs and includes full time direct hires, indirect hires, and foreign
nationals. Dual-status technicians are included in both the selected reserve part-time end
strength and the civilian FTEs.
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GAO-13-470 Defense Workforce
year 2001 levels. The active component of the military workforce
increased by 3 percent, or about 40,000 personnel, to about 1.425 million,
and the reserve component of the military workforce decreased by 2
percent, or about 21,000 personnel, to about 848,000 during this same
time period. By fiscal year 2017, DOD projects that its active component
end strength will fall below its fiscal year 2001 level to about 1.32 million,
and its reserve component end strength will continue to be below its fiscal
year 2001 level. DOD projects that the civilian workforce will also
decrease by fiscal year 2017 to about 784,000 FTEs—about 14 percent
above its fiscal year 2001 level. Historically, the size of the civilian
workforce has represented about a quarter of DOD’s combined military
and civilian workforce. 31 This ratio has remained relatively constant,
ranging from 23 to 27 percent since the 1960s and reflects substitution
between these workforces. Figure 2 shows the active component and
reserve component end strength and civilian FTEs from fiscal year 2001
through 2017.
31
We note that the size of a workforce does not equate to costs; an analysis of total
compensation of pay and benefits associated with a workforce would be necessary to
compare the costs of each workforce.
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GAO-13-470 Defense Workforce
Figure 2: Active and Reserve Components End Strength and Civilian Full Time Equivalents (FTE), Fiscal Years 2001 through
2017
Note: Data used for fiscal years 2001 through 2011 are actuals; those for fiscal years 2012 through
2017 are DOD projections, as presented in the fiscal year 2013 Future Years Defense Program, the
fiscal year 2013 President’s Budget, and certain data from the Comptroller Information System. Active
component end strength includes the Army, the Navy, the Marine Corps, and the Air Force
servicemembers as of the end of each fiscal year. The reserve component end strength represents
the selected reserve and includes the part-time and the full-time Army Reserve, the Navy Reserve,
the Marine Corps Reserve, the Air Force Reserve, the Army National Guard and the Air National
Guard servicemembers as of the end of each fiscal year. Civilian FTEs is an estimate of full time
direct hires, indirect hires, and foreign nationals for each fiscal year. Dual status technicians are
included in both reserve component end strength and civilian FTEs.
Among each of the military services, military and civilian workforce growth
differed over the course of the conflicts in Iraq and Afghanistan; however,
most military services project a decrease in the military and civilian
components of the workforce through fiscal year 2017. For example, from
fiscal year 2001 through fiscal year 2011, the Army and the Marine Corps
significantly increased the number of active component personnel to
execute the warfighting effort, whereas during this same time period, the
Navy and the Air Force decreased the number of active component
personnel by 14 and 6 percent, respectively. During this period of time,
the civilian workforce for all of the military services also increased. In light
of the withdrawal from Iraq and planned withdrawal from Afghanistan, as
well as changing priorities and missions, the Army, the Navy, and the
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GAO-13-470 Defense Workforce
Marine Corps project decreases among both the active component and
civilian workforce by 2017. The Air Force also projects a decrease in the
number of active component personnel, but projects a civilian workforce
increase of approximately 1 percent by fiscal year 2017. Collectively, the
defense-wide organizations, which include the Office of the Secretary of
Defense, the Joint Staff, and the Defense Agencies and Field Activities,
project an increase of approximately 1 percent for their civilian workforce
by fiscal year 2017. Table 1 shows the changes in the number and
percentage of the military and civilian components of the workforce
between fiscal years 2001 and 2011, with projected changes for fiscal
years 2012 through 2017 by service.
Table 1: Numbers and Percentages of Active Component, Reserve Component, and Civilian Workforce Changes from Fiscal
Year 2001 to Fiscal Year 2011 and Projected Numbers and Percentages from Fiscal Year 2012 to Fiscal Year 2017 (workforce
numbers in thousands)
Actuals
Projection
FY2001
FTE/end
strength
FY2011
FTE/end
strength
FTE/end
strength
change from
FY2001 to
FY2011
Army
481
565
85
Navy
378
325
FTE/end
strength
FY2017 change from
FTE/end
FY2012 to
strength
FY2017
Percentage
change from
FY2001 to
FY2011
FY2012
FTE/end
strength
Percentage
change from
FY2012 to
FY2017
18%
562
490
(72)
a
(13%)
a
a
326
320
(6)
a
(2%)
a
(10%)
a
a
Active component
Marine Corps
173
201
Air Force
354
333
1,385
1,425
206
205
Total active
components
(53)
a
28
(20)
a
40
(14%)
16%
202
182
(20)
a
a
333
329
(4)
a
(1%)
3%
1,423
1,320
(102)
a
(7%)
(0%)
a
205
205
a
(6%)
a
d,e
Reserve component
Army Reserve
Navy Reserve
88
65
(1)
a
(23)
a
(26%)
a
66
57
(0%)
a
40
40
(5%)
a
71
70
(2)
a
(3%)
a
3%
358
353
(5)
a
(1%)
a
a
107
101
(6)
a
(5%)
a
a
847
826
(22)
a
(3%)
Marine Corps
Reserve
40
40
(0)
a
Air Force
Reserve
75
71
(4)
a
352
362
Air Force
National Guard
108
106
(3)
Total reserve
components
869
848
(21)
Army National
Guard
10
Page 18
a
(3%)
a
(2%)
(9)
-
0%
(14%)
a
0%
a
GAO-13-470 Defense Workforce
Actuals
Projection
FY2001
FTE/end
strength
FY2011
FTE/end
strength
FTE/end
strength
change from
FY2001 to
FY2011
Army
220
284
64
29%
265
248
(18)
a
(7%)
a
Navy
177
189
12
7%
190
189
(2)
a
(1%)
a
17
23
7
38%
24
24
(1)
a
(3%)
a
160
184
24
15%
186
187
Civilian
Percentage
change from
FY2001 to
FY2011
FY2012
FTE/end
strength
FTE/end
strength
FY2017 change from
FY2012 to
FTE/end
strength
FY2017
Percentage
change from
FY2012 to
FY2017
be
Marine Corps
Air Force
2
1%
Defense-wide
c
organizations
113
128
14
12%
136
137
Total civilians
687
807
120
17%
801
784
(17)
a
(2%)
a
Total active,
reserves, and
civilians
2,941
3,080
139
5%
3,071
2,930
(141)
a
(5%)
a
1
1%
Source: GAO analysis of DOD data.
Notes: All end strength and FTE figures are rounded to the nearest thousand. Totals might not add
due to rounding.
a
All figures in parentheses represent declines.
b
Civilian FTEs is an estimate of full time direct hires, indirect hires, and foreign nationals for each
fiscal year. Combatant command civilians are included in service totals
c
Defense-wide organizations include the Office of the Secretary of Defense, the Joint Staff, the
Defense Agencies and Field Activities
d
The reserve end strength represents the selected reserve and excludes the Individual Ready
Reserve and the Inactive National Guard
e
Dual status technicians are included in both reserve end strength and civilian FTEs.
Several Factors Affect the
Size of DOD’s Workforce
DOD and military service officials identified several factors that
contributed to changes in the size of the military and civilian components
of the workforce since fiscal year 2001. For example, DOD officials noted
that the conflicts in Iraq and Afghanistan, as well as recognition of the
need to rebuild the acquisition workforce, which had been significantly
reduced during the 1990s, and reduce DOD’s reliance on contractors
contributed to the shape and size of the military and civilian sectors of the
workforce over the past decade. Further, DOD cited other factors that led
to growth within the civilian workforce, such as the department’s new
cyber mission and areas specifically designated by Congress. The
following are examples that DOD officials have cited as contributing to the
change in the size and mix of DOD’s workforce.
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GAO-13-470 Defense Workforce
•
Military to civilian/contractor conversion: DOD officials stated that
about 50,000 military positions were converted to DOD civilian
positions or contractor performance since fiscal year 2004 to devote
more military positions to support of ongoing military operations.
Conversion to civilian performance may not be one-for-one due to
differences in military and civilian availability and productivity rates.
For example, civilians who are typically hired must be qualified for
their position, whereas military personnel often require on-the-job
training in addition to technical training received prior to assignments.
DOD’s military to civilian conversions were partly due to the high pace
of operations that occurred after September 11, 2001, which created
significant stress on the military’s operating forces. Further, in late
2003, DOD reported that studies had found thousands of military
personnel were being used to accomplish work tasks that were not
military essential. DOD found that civilians or contractors could
perform these tasks in a more efficient and cost-effective manner than
military personnel. The Navy and the Air Force reduced their military
end strength when functions performed by military billets, or positions,
were converted to civilian or contractor performance. Conversely,
when the Army and the Marine Corps converted functions performed
by military billets to DOD civilians, they retained these military billets
to be used in the operating force.
•
Contractor to civilian conversion (in-sourcing): DOD officials
noted that in-sourcing, or converting previously contracted functions to
performance by civilians, has been an effective tool for the
department to rebalance its workforce, realign inherently
governmental and other critical and core functions to government
performance, and in many cases, generate resource efficiencies for
higher priority goals. In April 2009, the Secretary of Defense
announced his intention to reduce the department’s reliance on
contractors and increase funding for new civilian authorizations. In our
February 2012 report, DOD officials stated that they could not
determine the number of contractor FTEs whose functions were insourced because DOD contracts for services, not positions, 32 and the
number of contractor FTEs used to perform a service is determined by
each private sector provider. Nonetheless, one of the data elements
DOD is required to collect and include in its inventory of contracted
32
GAO, Defense Workforce: DOD Needs to Better Oversee In-sourcing Data and Align Insourcing Efforts with Strategic Workforce Plans, GAO-12-319 (Washington, D.C.: Feb. 9,
2012).
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GAO-13-470 Defense Workforce
services is the number of contractor FTEs performing each identified
activity pursuant to a contract.
•
Growth of acquisition workforce: DOD officials noted that
rebuilding the acquisition workforce is another reason for growth. In
our June 2012 report, we reported that according to DOD officials, the
civilian acquisition workforce gained about 17,500 positions from fiscal
year 2009 to December 2011. 33 As noted previously, a portion of this
growth was attributed to in-sourcing. The acquisition workforce had
experienced significant erosion in some areas of expertise due to a
nearly 50 percent cut in its workforce during the 1990s. This reduction
took place as part of DOD’s larger effort to reduce its civilian
workforce by nearly 20 percent overall during that time. When we
evaluated DOD’s approach to this force reduction in 1992, we found
that it was not oriented toward shaping the makeup of the workforce,
resulting in significant imbalances in terms of shape, skills, and
retirement eligibility. 34 At that time, we found that the department’s
efforts were hampered by incomplete data and lacked a clear strategy
for avoiding the adverse effects of downsizing and minimizing skills
imbalances. The downsizing produced serious imbalances in the skills
and experience of the highly talented and specialized civilian
acquisition workforce, putting DOD on the verge of a retirement-driven
talent drain that has had long-lasting implications. To help alleviate
some of these long standing challenges and provide additional funds
for the recruitment, training, and retention of acquisition personnel, in
2008, Congress established the Defense Acquisition Workforce
Development Fund (DAWDF). 35 DOD officials stated that of the
approximately 17,500 positions, about 5,850 were hired using
DAWDF funds.
•
Growth of cyber security workforce: DOD officials stated that focus
on the new cyber mission increased the size of the cyber workforce.
DOD’s 2010 Quadrennial Defense Review designated cyberspace
33
GAO, Defense Acquisition Workforce: Improved Processes, Guidance, and Planning
Needed to Enhance Use of Workforce Funds, GAO-12-747R (Washington, D.C.: June 20,
2012).
34
GAO, Defense Force Management: Expanded Focus in Monitoring Civilian Force
Reductions Is Needed, GAO/T-NSIAD-92-19 (Washington, D.C.: Mar. 18, 1992).
35
National Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181, § 852
(2008), codified at 10 U.S.C. § 1705.
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GAO-13-470 Defense Workforce
operations as a key mission area and discussed steps the department
was taking to strengthen capabilities in the cyber domain, including
developing a department-wide comprehensive approach to DOD
operations in cyberspace that will help build an environment in which
cyber security and the ability to operate effectively in cyberspace are
viewed as priorities for DOD. According to the Quadrennial Defense
Review, to aid its efforts in countering cyberspace threats, DOD
established the U.S. Cyber Command in 2010 to lead, integrate and
better coordinate the day-to-day defense, protection, and operation of
DOD networks. In November 2011, we reported that DOD established
a cybersecurity workforce plan but faced challenges in determining
the size of its cybersecurity workforce because of variations in how
work is defined and the lack of an occupational series specific to
cybersecurity. 36 For these reasons, in February 2013, we included
workforce planning for cybersecurity personnel as a factor in
designating human capital management as a high risk area for the
federal government. 37
The withdrawal from Iraq and planned withdrawal from military operations
in Afghanistan will impact both the military and, to some extent, the
civilian workforce. DOD currently projects a reduction in its civilian
workforce by 2 percent from fiscal year 2012 through fiscal year 2017.
Several factors have prompted the department to develop plans to
reshape and possibly reduce the numbers of civilians performing certain
functions, while other needs may require additional civilian positions.
DOD and military service officials identified the following factors as key
drivers of projected future change within DOD’s total workforce.
•
Shift in focus to Pacific region: DOD is refocusing its strategy in the
Asia-Pacific region in the interest of promoting regional security with
its allies in the area. DOD officials stated that this restructuring could
result in a reshaped force and might require changes to installations
and support as forces are restructured.
•
Budget constraints and uncertainty: DOD, as well as the entire
federal government, is currently operating in a fiscally constrained
environment. The Office of the Secretary of Defense, the military
36
GAO, Cybersecurity Human Capital: Initiatives Need Better Planning and Coordination,
GAO-12-8 (Washington, D.C.: Nov. 29, 2011).
37
GAO-13-283.
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departments, and other organizations within DOD have issued
guidance to their commands on immediate actions that can be taken
to mitigate some, but not all, of the effects of a constrained budget in
the near-term. Actions include implementing a civilian hiring freeze,
reducing temporary employees, and furloughing the civilian workforce.
•
Efficiency initiatives: As the federal government confronts growing
fiscal challenges and DOD faces competition for funding, DOD
announced efficiency initiatives in 2010, which the Secretary of
Defense stated were to reduce duplication, overhead, and excess,
and instill a culture of savings and restraint across the department.
Some of the efficiency initiatives focused directly on civilian workforce
levels, including the goals of reducing civilian positions in offices and
commands across DOD, attempting to hold the civilian workforce level
constant at fiscal year 2010 levels, the elimination of some civilian
senior executive positions, and the disestablishment of the Business
Transformation Agency and Joint Forces Command.
•
Continued growth of cyber workforce: According to officials we
spoke to from each of the services, DOD is continuing to focus its
resources on emerging threats such as cyber attacks. For example,
efforts are underway to further develop and implement the cyber
mission. Each service has its own part in this mission and expects a
continued hiring increase in civilian personnel with skills in
cybersecurity. Further, the Secretary of Defense recently stated that
the cyber mission is critical for the department and will continue to be
an investment priority.
•
Equipment reset: Military service officials stated that the equipment
that returns from the military operations in Afghanistan will be sent to
depots for repair and maintenance. Reset work, which is performed, in
part, by the civilian workforce, will take two to three years to
complete. 38
•
Medical assistance for returning servicemembers: More than a
decade of fighting two wars has resulted in a large number of soldiers,
marines, sailors, and airmen needing medical care, including, among
other things, adjusting to the use of prosthetic limbs and treatment for
38
Reset refers to the repair, recapitalization, and replacement of military equipment in
order to restore units’ equipment to a desired level of combat capability commensurate
with mission requirements and availability of resources.
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GAO-13-470 Defense Workforce
post traumatic stress disorder and traumatic brain injuries. DOD
officials stated that it will be important to retain and recruit additional
medical personnel to continue to provide for the medical needs of
servicemembers, who can sometimes require long-term care.
We analyzed the active component of the military and civilian workforce
to provide further perspectives on areas of growth between fiscal years
2001 and 2011. Our analysis of active component end strength and
civilian FTEs by force and infrastructure categories 39 shows that between
fiscal years 2001 and 2011, the civilian workforce generally grew while
the active component workforce generally declined in most force and
infrastructure categories compared to fiscal year 2001. For example, from
fiscal year 2001 through fiscal year 2011, the acquisition infrastructure
workforce 40 and the defense health program civilian workforce grew by 15
percent and 57 percent respectively, while the active component declined
in those categories by 16 percent and 3 percent respectively. Further,
according to DOD officials, the growth from fiscal year 2001 through fiscal
year 2011 of the civilian workforce in certain categories such as operating
forces and command and intelligence was in large part due to military to
civilian conversions. Table 2 shows the growth and decline of various
force and infrastructure categories.
39
Force and infrastructure categories group forces—the warfighting tools of the
Combatant Commanders—into broad operational categories according to their intended
use and groups infrastructure, the set of activities needed to create and sustain forces,
based upon the type of support activity it performs (such as force installations or central
logistics).
40
The acquisition infrastructure includes activities that develop, test, evaluate, and
manage the acquisition of military equipment and supporting systems. These activities
also provide technical oversight throughout a system’s useful life.
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GAO-13-470 Defense Workforce
Table 2: Percentage of Active Component End Strength and Civilian Full Time
Equivalent (FTE) Growth and Decline from Fiscal Year (FY) 2001 to Fiscal Year 2011
by Force and Infrastructure Category
Growth/decline from FY2001 to FY2011
Force and Infrastructure Category
Operating Forces
Active component
Civilian
17%
58%
Acquisition Infrastructure
(16%)
a
Central Logistics
(46%)
a
Central Personnel Administration
(31%)
a
(27%)
a
(7%)
a
(13%)
a
(24%)
a
Central Personnel Benefits Programs
Central Training
Command and Intelligence
Communications and Information
Infrastructure
23%
15%
(10%)
a
23%
93%
(29%)
a
Defense Health Program
(3%)
a
57%
Departmental Management
(5%)
a
13%
(52%)
a
32%
(13%)
a
35%
Force Installations
Science and Technology Program
(11%)
a
Source: GAO analysis of DOD data.
a
All figures in parentheses represent declines.
b
Projected end strength by force and infrastructure category does not include end strength funded in
supplemental appropriations.
Comparable Historical
Data on Contractor
Workforce Are Not
Available, but Spending on
Contracted Services Has
Increased Significantly
Since 2001
Historical information on the trends of the contractor component of DOD’s
total workforce since 2001 that would be comparable to information
known about the military and civilian components is not available. This
has occurred in part because DOD contracts for services, not individuals,
and because DOD was not required to track such information until 2008
when Congress required DOD to compile its first annual inventory of
contracted services, starting with the services DOD contracted for in fiscal
year 2007. To date, DOD has submitted annual inventories of contracted
services to Congress for fiscal years 2007, 41 2008, 2009, 2010, and
41
The Army was the only DOD component to submit information for DOD’s inventory of
fiscal year 2007 contracted services.
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GAO-13-470 Defense Workforce
2011. 42 However, DOD officials cautioned against comparing the number
of contractor FTEs reported across fiscal years because of differences in
the estimating formula, changes in reporting for the research and
development category, and other factors. 43 In fiscal year 2011, DOD
reported that about 710,000 contractor FTEs were performing various
functions pursuant to contracts for services—about 90 percent of the size
of DOD’s civilian workforce of 807,000 FTEs. Further, in its fiscal year
2011 inventory, DOD reported that these 710,000 contractor FTEs
provided services to DOD under contracts with obligations totaling about
$145 billion. 44 Table 3 shows the total number of estimated contractor
FTEs reported and obligation dollars reported in DOD’s inventory of
contracted services for fiscal years 2008 through 2011.
Table 3: Estimated Number of Contractor Full Time Equivalents (FTE) and
Obligations as Reported in DOD’s Inventory of Contracted Services
Fiscal Year
Number of contractor
FTEs reported
Obligation Total
(In billions)
2011
710,000
$145
a
2010
623,000
$121
a
2009
767,000
$155
a
2008
655,000
$127
a
Source: DOD’s inventory of contracted services.
Notes: The changes in DOD’s overall approach, in particular how DOD as a whole reflected research
and development services and the use of different formulas for estimating contractor FTEs, among
other factors, affected the reported changes in inventory data from year to year. Consequently, we
and DOD officials agree that caution should be exercised when making direct comparisons between
fiscal years 2008 through 2011 inventory data. All full time equivalent figures are rounded to the
nearest thousand.
a
The Army’s inventory data reflects total invoiced dollar amounts rather than obligations.
42
In December 2011, section 936 of the National Defense Authorization Act for Fiscal
Year 2012 amended section 2330a of title 10 of the U.S. Code to clarify the types of
contracted services to be inventoried include contracts for goods to the extent services are
a significant component in a separate line item of the contract.
43
GAO-12-357.
44
DOD is required to annually compile an inventory of contracted services, pursuant to 10
U.S.C § 2330a, to include, among other data, the functions performed, the number of
contractor FTEs performing the function, and the total dollar amount of the services
purchased. For fiscal year 2011, we note that obligations reported for contracted services
in budget justification materials and obligations reported in the inventory of contracted
services differ. We have previously reported that a number of factors limit the accuracy
and completeness of the inventory data; see for example, GAO-12-357.
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In terms of DOD’s obligations for contracted services, our analysis of
DOD budget documentation using fiscal year 2013 constant dollars
shows that DOD’s obligations on contracted services peaked in fiscal
year 2010 at about $195 billion, more than twice the amount spent in
fiscal year 2001, before decreasing to about $174 billion in fiscal year
2012. Figure 3 shows the obligated dollars for contracted services for
fiscal years 2001 through 2012 and the projected obligated dollars for
fiscal years 2013 and 2014.
Figure 3: Obligations for Contracted Service Actions, Fiscal Years 2001 through 2014
Note: Fiscal year 2001 through 2012 are actual obligations, while fiscal year 2013 and 2014 represent
projections. We relied on budget data on obligations for contracted services (object class 25). We
excluded object class 25.3 that represents dollars obligated for goods and services from federal
sources. We adjusted the current dollars to constant fiscal year 2013 dollars using the Gross
Domestic Product price index to eliminate the effects of inflation.
In addition to the withdrawal from military operations in Iraq and
Afghanistan, the decline since fiscal year 2010 and projected decline
through fiscal year 2014 in obligations for contracted services can be
attributed, in part, to several actions taken by Congress and DOD over
the past several years. For example, in August 2010, the Secretary of
Defense announced plans to reduce funding for a subset of service
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contracts, service support contracts, by 10 percent per year from fiscal
years 2011 to 2013. Moreover, DOD is subject to a statutory cap on
obligations for contracted services for fiscal years 2012 and 2013, which
may not exceed the amount requested in the President’s budget for fiscal
year 2010, and we are required to report on the results of this effort later
this year. More recently, in February 2013, the Office of the Assistant
Secretary of Defense for Readiness and Force Management issued
guidance stating that during this time of continued budget uncertainty,
contracted services must continue to be reviewed to ensure the most
appropriate, cost effective, and efficient support aligned to mission.
DOD Has Taken Some
Steps Useful for
Determining the
Appropriate Mix of Its
Workforce, but
Shortcomings Remain
DOD has taken some steps to improve its understanding and
management of its workforce, including service-specific efforts to obtain
better data about the workforce; however, several shortcomings remain.
Specifically, DOD has yet to include an assessment of the appropriate
mix of military, civilian, and contractor personnel capabilities in its
strategic workforce plan as required by law. Further, DOD has not
updated its policies and procedures to reflect the most current statutory
requirements to use its civilian strategic workforce plan and the inventory
of contracted services to help determine the appropriate mix of personnel
in its workforce.
DOD’s Efforts to Obtain
Better Information on
Workforce Capacity
Continue to Face
Challenges
DOD has taken some steps to develop better information and data about
the size, capabilities, and skills possessed and needed by its workforce,
but gaps remain. As part of the statutory requirement to develop a civilian
strategic workforce plan, DOD has been mandated since 2006 to assess
the critical skills and competencies of its current and future civilian
workforce and to assess gaps in those areas. 45 To date, DOD has
developed and updated its strategic workforce plan four times. In its latest
strategic plan issued in March 2012, DOD identified 22 mission critical
occupations, which according to DOD are civilian personnel occupations
that merit special attention based on their importance and the presence of
human capital challenges. In September 2012, we issued a report on
DOD’s March 2012 plan that found that DOD had conducted competency
gap analyses for just 8 of the 22 mission critical occupations identified in
45
National Defense Authorization Act for Fiscal Year 2006, Pub. L. No. 109-163 §1122
(2006) (codified as amended at 10 U.S.C. § 115b).
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the plan, and it still did not contain an assessment of the appropriate
workforce mix as required by law. 46 Examples of occupations where DOD
did not report conducting gap analyses included budget analysis,
information technology management, and logistics management. Many of
the occupations are associated with areas identified in our high-risk
report. 47 We recommended that DOD conduct and report on gap analysis
of its mission critical occupations, and DOD partially concurred with this
recommendation and stated that it plans to complete competency gap
analysis for mission critical occupations and other major civilian
occupations by fiscal year 2015.
Further, section 115b of title 10 of the United States Code requires DOD
to include in its strategic workforce plan an assessment of the appropriate
mix of military, civilian, and contractor personnel capabilities. 48 However,
as we have previously reported, DOD did not include an assessment of
the appropriate mix of military, civilian, and contractor personnel or an
assessment of the capabilities of each of these workforces. 49 In the most
recent version of the strategic workforce plan issued in March 2012, DOD
included information submitted by 11 functional communities, which are
groups of employees who perform similar functions. We found that 2 of
the 11 functional communities included in the plan—the medical and
human resources functional communities—provided data on the mix of
their workforces, while 9 communities provided partial or no data. For
example, the logistics and information-technology functional communities
provided only the military and civilian workforce data and did not include
contractor workforce data. In September 2012, we recommended that
DOD direct the functional communities to collect information that identifies
not only the number or percentage of personnel in its military, civilian, and
contractor workforces but also the capabilities of the appropriate mix of
those three workforces, and DOD partially concurred with this
46
GAO-12-1014.
47
GAO-13-283.
48
10 U.S.C. § 115b.
49
GAO-12-1014; GAO, Human Capital: Further Actions Needed to Enhance DOD’s
Civilian Strategic Workforce Plan, GAO-10-814R (Washington, D.C.: Sept. 27, 2010);
Human Capital: Opportunities Exist to Build on Recent Progress to Strengthen DOD’s
Civilian Human Capital Strategic Plan, GAO-09-235 (Washington, D.C.: Feb. 10, 2009);
and The Department of Defense’s Civilian Human Capital Strategic Plan Does Not Meet
Most Statutory Requirements, GAO-08-439R (Washington, D.C.: Feb. 6, 2008).
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recommendation. Further, in January 2013, we recommended that DOD
use competency gap analyses to assist in decision making regarding the
size of its civilian workforce. 50
Congress has also required several actions to provide more complete and
accurate information about DOD’s contractor workforce similar to the type
of information DOD already has about its civilian and military workforces,
such as the requirement, as noted previously, to compile an inventory of
contracted services, including the number of contractor FTEs performing
services for DOD and the type of functions they perform. 51 Section 2330a
of title 10 of the United States Code requires DOD to submit to Congress
an annual inventory of contracted services. This section further requires
each DOD component head to conduct comprehensive reviews of these
services to determine, for example, whether they are inherently
governmental, critical, or acquisition workforce functions, and whether
performance of such functions by contractors should be converted to
performance by the civilian workforce. Additionally DOD component
heads are required to develop a plan, including an enforcement
mechanism and approval process, to provide for the use of the inventory
to implement the requirements of 10 U.S.C. § 129a, such as using the
inventory in making workforce mix decisions, to inform strategic workforce
planning, such as the strategic workforce plan required by 10 U.S.C. §
115b, and to facilitate the use of the inventory for compliance with 10
U.S.C. § 235, which requires the inclusion of certain contractor
information in budget submissions. We previously reported that while
DOD made a number of changes to improve the inventory, there were still
factors that limited the utility, accuracy, and completeness of the inventory
data. Therefore, we made a series of recommendations to DOD to further
improve its inventory of contracted services. 52
During the course of this review, we found that some of the military
services are taking additional steps to better manage their civilian or total
workforces. For example, Army officials stated that they developed a list
of nearly 40 mission critical occupations that are specific to the Army,
which are in addition to the department wide mission critical occupations
50
GAO-13-188.
51
10 U.S.C. § 2330a.
52
GAO-12-357 and GAO-11-192.
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identified in the most recent version of the civilian strategic workforce
plan, and that they plan to complete competency gap analyses for the
Army-specific mission critical occupations by the end of 2014. Officials
from the Marine Corps reported that they are developing a six step
process for strategic workforce management planning to be implemented
at the command level by late 2013. These officials stated that the process
would include steps such as assessing current and future missions,
performing gap analysis, and developing action plans to address gaps.
DOD Has Not Updated Its
Workforce Policies to
Reflect the Most Recent
Statutory Requirements for
Workforce Mix
Determinations
DOD’s primary policies for determining workforce mix—DOD Directive
1100.4 and DOD Instruction 1100.22—largely reflect statutory
requirements for DOD policies concerning workforce mix, though there
are several recent amendments that have yet to be incorporated. 53 The
directive provides general guidance concerning determining
requirements, managing resources, and future planning, while the
instruction provides manpower mix criteria and guidance for determining
how individual positions should be designated based on the work
performed. For example, the latter provides guidance concerning how to
identify whether a task is inherently governmental, and consequently
must be performed by military personnel or civilians, or whether a
commercial activity should be performed by the contractor workforce or
meets DOD criteria to exempt the activity from contract performance.
Officials from the Office of the Undersecretary of Defense, Personnel and
Readiness told us that they review shifts in trends among the various
segments of the workforce, and that they rely upon the oversight of the
military services to determine which segment of the workforce should
perform specific types of work in accordance with DOD guidance.
Various OSD officials further noted that the requirements determination
process is associated with the department’s Planning, Programming,
Budgeting and Execution processes to help ensure fully informed risk and
cost decisions are translated into justified and transparent manpower
requirements. DOD Instruction 1100.22 states that the heads of the DOD
components shall require their designated manpower authority to issue
implementing guidance that requires the use of the instruction when
manpower officials determine the workforce mix for current, new, or
53
DOD Directive 1100.4, Guidance for Manpower Management (Feb. 12, 2005) and DOD
Instruction 1100.22, Policy and Procedures for Determining Workforce Mix (Apr. 12,
2010).
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expanded missions, or when revalidating manpower requirements,
among other circumstances. Each military service has issued servicespecific workforce management guidance that implements the DOD-wide
instruction as required and officials we spoke with from each service
stated that the DOD-wide guidance was used when making workforce mix
decisions. To make workforce decisions, manpower officials within the
components are to identify the appropriate workforce component to
perform the activity based on the nature of the work and circumstances of
its performance as outlined in the instruction. Criteria are reviewed to
determine if the work associated with the activity is an inherently
governmental function, exempt from commercial performance, or suitable
for performance by contractors, and for work that is inherently
governmental or exempt from commercial performance, whether the work
should be performed by military personnel or civilian personnel. The focus
of the process of determining the workforce mix is primarily at the position
level, as opposed to a holistic view of the overall appropriate mix of
military, civilian, and contractor personnel.
DOD issued its directive and instruction in February 2005 and April 2010,
respectively, prior to significant changes to relevant legislation in
December of 2011. 54 Prior to these 2011 changes, the legislation
governing DOD’s personnel required that the department use the least
costly form of personnel consistent with military requirements and other
departmental needs. Section 129a was revised to clarify that when
determining the most appropriate and cost efficient mix of military, civilian,
and contractor personnel to perform the mission of the department, that
the attainment of a DOD workforce sufficiently sized and comprised of the
appropriate mix of personnel necessary to carry out DOD’s mission and
the core mission areas of the armed forces takes precedence over cost.
The law also specifies that the Secretary of Defense shall establish
policies and procedures that shall specifically require DOD to use, among
other things, the civilian strategic workforce plan 55 and the inventory of
contracted services 56 when making determinations regarding the
appropriate workforce mix. Although DOD Instruction 1100.22 had
already addressed the requirement that risk mitigation take precedence
54
National Defense Authorization Act for Fiscal Year 2012, Pub. L. No. 112-81, § 931
(2011) amending 10 U.S.C. §129a.
55
As required by 10 U.S.C. § 115b.
56
As required by 10 U.S.C. § 2330a.
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over cost in making workforce decisions prior to the enactment of section
129a, DOD has not yet implemented the new requirement that
determinations regarding the appropriate workforce mix be made using
the civilian strategic workforce plan and the inventory of contracted
services. As a result, DOD decision makers may lack key elements
necessary to make appropriate, informed decisions concerning DOD’s
mix of personnel because the department has not updated its existing
policies and procedures or issued new guidance for determining
workforce mix that reflects the new statutory requirements. OSD officials
stated that both DOD Directive 1100.4 and DOD Instruction 1100.22 are
currently under revision, and stated that they intend to revise DOD
Directive 1100.4 to require the use of the inventory of contracted services
to inform budget requests and decisions for total force management. The
officials provided a draft of the directive for our review and stated that is
was in the early stages of coordination and review. DOD did not provide a
draft of the instruction or discuss timelines for issuance of a revised
instruction.
Related to the statutory changes to departmentwide workforce
management, similar legislation requires certain defense components to
use the inventory of contracted services as part of their strategic
workforce management. Specifically, 10 U.S.C. § 2330a(e) requires that
DOD component heads perform a review of the contracts and activities in
the inventory to ensure that the activities on the list do not include
inherently governmental functions or illegal personal services contracts,
and, to the maximum extent practicable, do not include functions closely
associated with inherently governmental functions. The review is also
required to identify activities that should be considered for conversion to
civilian performance pursuant to 10 U.S.C. § 2463. In 2012, our review of
DOD’s fiscal year 2010 inventory of contracted services found that the
military departments’ required reviews of their fiscal year 2009 inventories
were incomplete, and that with the exception of the Army, DOD had much
further to go in addressing the requirements for compiling and reviewing
the inventories of contracted services. 57
Additionally 10 U.S.C. § 2330a(f) requires the secretaries of the military
departments and heads of the defense agencies to develop a plan,
including an approval process and enforcement mechanism, to provide
57
GAO-12-357.
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for the use of the inventory of contracted services to implement the
requirements of 10 U.S.C. § 129a, to ensure the inventory is used to
inform strategic workforce planning, such as the strategic workforce plan
(as required by 10 U.S.C. § 115b), and to determine the appropriate
workforce mix necessary to perform its mission. However, the extent to
which the military departments have developed the required plans and
accompanying approval process and enforcement mechanism varies.
Some military department officials indicated that they are in the final
stages of developing a plan to integrate the required information, and
other military department officials stated that they plan to move forward
once better information on contractors required by the inventory of
contracted services becomes available. For example,
•
Army manpower officials stated that the Army had conducted
analyses that could support the required plan. Regarding the required
enforcement mechanism and approval process, an Army official
stated that the Army has established its Panel for the Documentation
of Contractors review process, which requires commands to fill in a
pre-award contract approval form in order to justify a request to
procure services. This form asks executives to certify that contracted
services do not include inherently governmental functions, among
other things. In addition, the official stated that the Army’s annual
inventory of contracted services, and its inventory review process, the
Panel for the Documentation of Contractors, are intended to inform
strategic workforce planning, provide information for in-sourcing
decisions, and to the extent possible, inform budget requests.
•
Air Force manpower officials stated that while the Air Force lacks a
single plan, a number of separate efforts are moving towards the
required elements of the plan. The officials stated that the Air Force
plans to modify its manpower data system to accommodate the
important contractor information captured in and required by the
inventory of contracted services, and then define the utilization,
approval and enforcement process in an Air Force Instruction.
•
Navy manpower officials stated that the Navy has authorized the
establishment of a Total Force Integration Board, including multiple
stakeholders, to address all required elements. Marine Corps
personnel officials stated that the Marine Corps is awaiting guidance
from the Department of the Navy on a proposed plan and the related
enforcement mechanism.
Given the absence of updated guidance and key data concerning each
segment of its workforce, DOD lacks assurance that the performance of
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key functions is properly balanced across the military, civilian, and
contractor segments of its workforce to achieve the total force
management objectives and avoid inappropriate operational risk. The
absence of updated guidance and lack of accurate information
concerning the activities performed by each segment of DOD’s workforce
means that in the context of challenging fiscal realities, DOD leaders may
lack knowledge to determine the most appropriate overall mix of military,
civilian, and contractor personnel and competencies that could help them
make more informed decisions concerning departmental priorities and
associated costs. Our prior work has identified the need for DOD to obtain
better data on its contracted services to enable it to make more strategic
workforce decisions and ensure that it maintains appropriate control of
government operations. For example, we previously reported in April
2012 that reviews conducted by the Army and Air Force of their inventory
of contracted services identified 1,935 and 91 instances, respectively, in
which contractors were performing inherently governmental functions.
However, in our 2012 report, we found that in several of those cases
contractors were still performing that work and there were no clear lines
of responsibility for addressing those instances. 58 Army officials also
noted that DOD’s decision to freeze civilian FTEs at fiscal year 2010
levels was an impediment to resolving the performance of these
inherently governmental functions by contractors. We note, however, that
in January 2013 we found that despite obtaining exceptions to adjust their
fiscal year 2012 targets above the fiscal year 2010 civilian FTE level, the
Army exceeded its target; the Air Force and Navy met their target civilian
FTE levels. 59 Without better guidance and data that informs the
determination of the appropriate mix, DOD may be challenged to fully
meet legislative requirements regarding the management of its workforce
58
GAO-12-357.
59
GAO-13-188.
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DOD Defines the Core
Missions of the
Department, but
Current Policy Does
Not Fully Reflect the
Need to Identify
Critical Functions
DOD clearly identifies the core mission areas of the armed forces, which
cover broad areas of military activity that the department is statutorily
required to identify, but given the wide range of missions and
responsibilities of its various components, DOD has not developed a list
of “core or critical functions” for the department as a whole, nor is it
required to do so. OMB policy requires executive agencies to identify
critical functions in the context of contracting; but DOD’s current
workforce mix policies do not fully reflect the need to identify critical
functions, and as such the department may not have assurance that it
properly identifies and retains the ability to maintain control over critical
functions.
DOD Clearly Defines Core
Mission Areas
DOD clearly identifies the core mission areas of the armed forces, but it
does not perform analysis to specifically identify a list of “core or critical
functions.” Section 129a of Title 10 of the United States Code requires
that the Secretary of Defense adopt policies that clearly provide that the
attainment of a workforce sufficiently sized and comprised of the
appropriate mix of personnel necessary to carry out the mission of the
department and the core mission areas of the armed forces takes
precedence over cost. 60 The core mission areas of the armed forces are
broad strategic military activities required to achieve strategic objectives
of the National Defense Strategy and National Military Strategy, such as
providing homeland defense and carrying out major combat operations, in
support of DOD’s overall mission to deter war and provide for the security
of the nation. 61 The core mission areas are identified in DOD’s
Quadrennial Roles and Missions Review Report which is issued near the
end of implementation of the department’s quadrennial defense review
cycle. DOD manpower officials we spoke with stated that this top-level
direction is communicated throughout the department.
Determining the core or critical work of the department can be
complicated by the various contexts under which the terms “core” or
“critical,” are used. For example, as discussed previously in this report,
DOD identifies “mission critical occupations” in its strategic workforce
plan. These are occupations that merit special attention based on their
60
10 U.S.C. §129a.
61
The identification of core mission areas is pursuant to 10 U.S.C. § 118b.
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importance and the presence of human capital challenges, and only apply
to the civilian workforce. On the other hand, OMB policy requires that the
executive agencies define “critical functions to ensure that they have
sufficient internal capability to maintain control over certain functions that
are core to the agency’s mission and operations.
DOD Policy Does Not
Fully Reflect Federal
Requirements to Identify
Critical Functions
DOD’s current workforce mix policy, DOD Instruction 1100.22, does not
fully reflect the need to identify critical functions. Office of Federal
Procurement Policy Policy Letter 11-01 (OFPP 11-01), 62 issued in
September 2011, requires agencies to identify “critical functions” to
ensure that they have sufficient internal capability, in DOD’s case civilian
and military personnel, to maintain control over functions that are core to
the agency’s mission and operations, but are otherwise permissible to
contract out to the private sector. 63 The identification of critical functions
would help ensure that DOD can accomplish its mission even if
contractors are unable to perform or otherwise default on their contractual
responsibilities. While critical functions often represent important
functions that may be necessary in support of the department’s mission,
they do not include functions that are inherently governmental in nature,
or functions that are closely associated with inherently governmental
functions.
DOD officials stated that they do not plan to develop a list of critical
functions for the department as a whole because the missions of
organizations within a department as large as DOD vary considerably,
and that other designations serve the same purpose. Further, they stated
a function that might be critical for one organization may be a lesser
priority, and therefore not critical, for another. DOD officials told us that
the designation of billets or positions as exempt from commercial
performance (commercial-exempt billets) meets the intention of
identifying critical functions. Based on guidance in DOD Instruction
62
Office of Management and Budget, Office of Federal Procurement Policy-Policy Letter
11-01, Performance of Inherently Governmental and Critical Functions, September 2011.
63
In the context of strategic workforce management, the term “critical” has been used to
describe a number of separate efforts. As noted above, mission critical occupations are
civilian personnel occupations that merit special attention based on their importance and
the presence of human capital challenges. The term “critical functions” refers to a function
that is necessary to the agency being able to effectively perform and maintain control of its
mission and operations.
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1100.22, DOD components review all billets on an annual basis to
determine which segment of the workforce should perform certain types
of work. The Instruction provides for a variety of reasons for which a billet
may be given a commercial-exempt designation, thereby reserving that
billet for performance by civilian or military personnel. However, under
this Instruction, positions may be designated as commercial exempt for a
variety of reasons aside from their possible consideration as critical,
including reasons such as esprit d’ corps and professional development.
It is therefore unclear how DOD can determine if the exemption of
individual positions from commercial performance ensures that DOD
maintains sufficient internal capability to retain control over critical
functions.
DOD’s current guidance does not fully reflect the need to identify critical
functions as required by federal policy because DOD has not updated its
workforce policies and procedures to reflect the requirements of OFPP
11-01. Officials from OFPP stated that many of the general principles
behind OFPP 11-01 were reflected in DOD’s current guidance, but
acknowledged that current DOD guidance may not specifically
incorporate the concept of critical functions as defined by the policy letter.
Part of the impetus for the guidance was the need to provide a consistent
understanding of the term “critical functions”. Ensuring that DOD
maintains sufficient internal capability to maintain control over its mission
is a key aspect of ensuring that departmental officials have enough
information and expertise to be accountable for the work product and can
continue critical operations with in-house resources should contractor
assistance be withdrawn. Absent specific policies and procedures that
delineate requirements relating to critical functions and explain how
components should identify these functions, DOD may lack assurance
that it properly identifies and retains the ability to maintain control over
critical functions. These efforts may be further hampered by the lack of
sufficient information necessary for DOD to make strategic determinations
of an appropriate workforce mix, as it may be difficult for the department
to determine if it has sufficient internal capability to perform a critical
function should contractors default on their responsibilities.
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DOD Components
Used the Inventory of
Contracted Services
and Other Data in
Budget Submissions,
but the Projections
Have Significant
Limitations
DOD components we reviewed used various methods and data sources,
including their inventories of contracted services, to project contractor
FTEs for their fiscal year 2013 and 2014 budget submissions, but our
analysis found that the components’ contractor FTE projections have
significant limitations. DOD’s Comptroller directed DOD components to
report contractor FTEs in their budget submissions that were consistent
with both the inventories, and funding levels of contracted services.
Among the challenges encountered by the DOD components in using the
inventory of contracted services, however, are the use of estimating
techniques based on inventory data that may not be accurate or current,
and the lack of a crosswalk between the inventory of contracted services
and specific budget lines of accounting. While the Army has a process
that addresses these challenges, it may be several years before the
remaining DOD components are able to do the same. DOD is taking
steps to help the remaining components address these challenges, but, in
the meantime, the budget does not provide an explanation of how the
contractor FTE estimates are derived and what limitations apply.
Disclosure of this information would help ensure that decision makers
draw informed conclusions.
DOD Components’ Budget
Submissions Included
Contractor FTE
Information for Fiscal
Years 2013 and 2014, but
the Accuracy of these
Projections Is
Questionable
In December 2011, the Comptroller issued guidance to defense
components instructing them to report contractor FTEs and funding levels
for contracted services in their fiscal year 2013 budget submissions in
accordance with 10 U.S.C. § 235. 64 Specifically, the guidance directed the
components to:
•
provide contractor FTE data that were consistent with the inventory of
contracted services they submit annually to the Congress,
•
provide contractor FTEs that were consistent with the funding levels
for contracted services, and
64
Office of the Under Secretary of Defense (Comptroller), Fiscal Year 2013 President’s
Budget Submission (Dec. 16, 2011).
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•
report contractor FTE data and funding levels for contracted services
in two separate budget exhibits in the operation and maintenance
budget account. 65
Though the Comptroller’s guidance does not specifically refer to it, 10
U.S.C. § 235(b)(2) requires that contractor FTE projections for the budget
submissions are to be based on both the inventory data and the reviews
of that data that DOD components are required to conduct to identify
whether contractors are performing services that should be converted to
civilian performance.
DOD’s fiscal year 2013 budget, submitted in February 2012, included the
information on contractor FTEs and related funding levels from the two
operation and maintenance budget exhibits. Overall, DOD requested
about $72 billion for contracted services in the operations and
maintenance account and projected that roughly 285,000 contractor FTEs
would be funded with that amount. 66
Two of the five components we reviewed—the Air Force and the Navy—
used their inventories of contracted services as a starting point to derive
the contractor FTE projections, but the data they relied on has significant
limitations. To derive their projections, Air Force and Navy budget officials
obtained the operation and maintenance budget requests for sub activity
groups prepared by resource managers for fiscal year 2013 and divided
these by an average contractor FTE cost figure derived from their fiscal
year 2010 inventories. This resulted in estimates of contractor FTEs for
the corresponding sub activity groups. For example, the Navy requested
$166 million for contracted services related to mission and other flight
operations activities for fiscal year 2013. Using the fiscal year 2010
inventory and applying inflationary factors, the Navy used an average
contractor FTE cost of $180,119 to derive a contractor FTE figure of 924
for this sub activity group. Navy budget officials told us they used the
same average contractor FTE cost for all of its different types of services.
65
The guidance specified that the contractor FTE data were to be shown in budget exhibit
OP-5, which provides detail by budget sub activity group, and that contracted services
funding shown in OP-32, which provides an appropriation summary of price and program
growth, were to be consistent with the OP-5 contractor FTEs.
66
Office of the Under Secretary of Defense (Comptroller), Fiscal Year 2013 Operation and
Maintenance Overview (February 2012).
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Both services’ fiscal year 2010 inventories were based primarily on data
from the Federal Procurement Data System-Next Generation (FPDS-NG)
system. 67 DOD has acknowledged that FPDS-NG has a number of
limitations that affect the utility, accuracy, and completeness of the
inventory data. For example, FPDS-NG does not identify more than one
type of service purchased for each contract action, is not able to capture
any services performed under contracts that are predominantly for
supplies, and cannot provide the number of contractor FTEs used to
perform each service, among other things. DOD officials acknowledge
that the use of derived average cost figures can result in inaccurate
reporting of contractor FTEs. For example, Navy budget officials noticed
that the funding for satellite lease services had decreased significantly,
but the contractor FTE estimate related to the services remained stable.
The budget officials believed that since the program had moved from the
development phase of its life cycle to the maintenance phase, the number
of contractor FTEs needed for the program would be less than 10
compared to the approximately 1,000 FTEs calculated for budget
purposes. The budget officials decided not to make adjustments to the
projections because they wanted to use a consistent approach to derive
the contractor FTEs. In January 2011, we reported that Army manpower
and OSD officials raised concerns about the use of average labor rates
and ratios to project contractor FTEs given the tendency of those
averages to obscure variations in the underlying data. 68 Further, our
analysis showed that the use of these averages resulted in significant
variations for some specific categories of services and particular
contracts. 69
For the fiscal year 2013 budget submissions, budget officials from the
remaining three components we examined used other data sources they
considered to be more reliable for their contractor FTE projections. These
officials explained that the fiscal year 2010 inventories were not aligned to
67
FPDS-NG is the federal government’s primary data system for tracking information on
contracting actions.
68
GAO-11-192.
69
For example, our January 2011 report found that the Army, which does not use FPDSNG to compile its inventory, reported 113,713 contractor FTEs performing professional,
administrative and management support services in their fiscal year 2009 inventory, but
would have reported significantly fewer—65,408 FTEs—if they had used the average
labor rates and ratios used by the Office of the Under Secretary of Defense for
Acquisition, Technology and Logistics. See GAO-11-192.
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their budget data, were outdated or were not appropriate for budget
projection purposes. For example, DISA and DLA budget officials noted
that the most current inventory data available at the time the components
were preparing their fiscal year 2013 budgets reflected contracts that
were active in fiscal year 2010. Further, component budget officials noted
that object class codes (used in preparing the budget) and product
service codes (used in tracking contracts in FPDS-NG) often did not have
a direct relationship, making the translation between the two categories
subjective. For example, object class 25.1, which is used to delineate
advisory and assistance services, is broad enough to encompass
numerous product service codes associated with multiple categories of
services. As a result, DISA and DLA relied on program managers to
provide their projections on what level of contractor FTEs would be
funded by the operation and maintenance budget requests.
Army budget officials explained that they did not use the inventory data
compiled from the Army’s Contractor Manpower Reporting Application
(CMRA) system when preparing their fiscal year 2013 budget submission.
The CMRA system is intended to capture data directly reported by
contractors on each service performed at the contract line item level,
including information on the direct labor dollars, direct labor hours, total
invoiced dollars, the functions and mission performed, and the Army unit
on whose behalf contractors are performing the services. It also captures
selected information from FPDS-NG and the Army’s accounting systems
(to include budget codes). While DOD’s AT&L and P&R leadership
considers the Army as currently having a reporting process and
infrastructure in place that fully complies with inventory legislative
requirements, CMRA data was not available in time. Instead, budget
officials relied on the Army’s Structure and Manpower Allocation System
(SAMAS), which according to budget and program officials contains
civilian, military, and contractor personnel information and is used during
the Army’s program and budget development process. However, an Army
manpower official explained that SAMAS does not include object class
data, dollars projected for contracted services, or information on
inherently governmental and closely associated with inherently
governmental functions. Table 4 summarizes the methods used by DOD
components in our review to derive their respective contractor FTE
projections.
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Table 4: Processes Used to Develop Contractor Full Time Equivalent (FTE) Projections in Fiscal Year 2013 Budget
Submissions
DOD
Component
Source for contractor
FTE estimate
Air Force
Inventory of Contracted
Services
Used inventory to develop an average contractor FTE cost estimate. The cost
estimate was then divided into the dollar value of specific budget activity groups to
derive contractor FTE projections for those activity groups.
Navy
Inventory of Contracted
Services
Used inventory to develop an average contractor FTE cost estimate. The cost
estimate was then divided into the dollar value of specific budget activity groups to
derive contractor FTE projections for those activity groups.
Army
Structure and Manpower
Allocation System
Extracted contractor personnel information from Army’s manpower system
DISA
Program Managers
Estimated contractor FTEs based on data provided by program managers and
statements of work
DLA
Program Managers
Used contractor FTEs provided by program managers
Processes used to develop contractor FTEs provided in budget submissions
Source: GAO analysis of DOD information.
The Comptroller issued updated guidance in June 2012 for the fiscal year
2014 through 2018 budget submissions. The updated guidance
incorporated two significant changes from the 2011 guidance. The
components are now required to (1) include contractor FTE estimates for
not only the operation and maintenance account, but also for nonoperation and maintenance accounts including the procurement and
research, development, test and evaluation budget accounts 70 and (2)
report contractor FTE and budget data together, rather than separately for
different budget accounts.
According to Navy and Air Force officials, for the fiscal year 2014 budget
submission, they followed the same approach used to project contractor
FTEs that they did for their fiscal year 2013 budget submission; that is,
they derived an average contractor FTE cost from their fiscal year 2011
inventory data. Therefore, the resulting projections will have the same
limitations as their fiscal year 2013 projections. Navy and Air Force
officials indicated that they used an average contractor FTE cost derived
from their inventory to generate estimates for procurement and research,
development, test and evaluation contractor FTEs in the same manner as
70
Contractor FTE data that are informed by the inventory of contracted services are to be
provided in the PB-32 budget exhibit, which provides a summary of price and program
growth for the procurement and research, development, test and evaluation budget
accounts, in addition to the OP-32 exhibit.
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they did for operation and maintenance-related activities. DLA and DISA
officials indicated that they followed the same process as they did for their
fiscal year 2013 budget submission whereby they relied on inputs from
their program managers.
According to Army budget officials, the Army used a different process to
project contractor FTEs for their fiscal year 2014 budget submission.
These officials told us that the Army used information contained in its
inventory of contracted services, which was compiled using data from its
CMRA system, as well as the results of its reviews as the basis for its
fiscal year 2014 contractor FTE projections. Army budget and manpower
officials noted that several factors facilitated the use of CMRA data for its
fiscal year 2014 budget contractor FTE projections. First, Army budget
officials noted that they received fiscal year 2011 CMRA data in sufficient
time to use for the fiscal year 2014 budget submission. Further, as part of
the Army’s inventory review process, when the individual commands
reviewed the inventory data associated with their contracted services,
they had assigned budget codes to the CMRA data so that it could be
aligned with the Army’s budget lines of accounting. In this regard, during
the Army’s inventory review process, Army command officials assigned
budget codes to the CMRA contract data through a web based
application. This process allowed budget officials to gain additional insight
into the types of services included in each line of accounting, and align
contractor FTES in the budget submissions in an easier and more
transparent manner.
At the conclusion of our review, DOD released the fiscal year 2014
Operation and Maintenance Overview, which reported that DOD
requested about $52.5 billion for contracted services in the operations
and maintenance account and projected that about 223,000 contractor
FTEs would be funded with that amount. During our review of the
document, we found that the funding amounts and the contractor FTE
summary information for each military department did not match the
figures that the military departments reported as part of their individual
fiscal year 2014 budget submissions. When we inquired as to the
possible reasons for the discrepancies, a Comptroller official, with
knowledge of the Operation and Maintenance Overview document, told
us that a variety of factors could have contributed to the differences,
including that the overview document excluded Health Program and
Research and Development contracts that the military services included
in their budget documents. The Comptroller official, however, did not
know the exact reasons for the discrepancies.
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DOD Is Taking Steps to
Improve the Accuracy of
Contractor FTE
Projections Included in
Future Budget
Submissions
DOD officials recognize that the contractor FTE information provided in
their fiscal year 2013 and 2014 budget submissions had significant
limitations, but noted that DOD has initiatives underway to improve the
accuracy of components’ inventories of contracted services and the
linkage between the inventories and budget data. However, according to
DOD officials, these initiatives are not expected to be fully implemented
for several years.
DOD officials stated that having a reliable, current inventory of contractor
FTEs is a fundamental building block for developing future contractor FTE
estimates. DOD has initiated efforts to improve inventory data by
collecting manpower data directly from contractors, using the Army’s
CMRA system as the model. To do so, DOD directed its components in
November 2012 to include a reporting requirement in new and current
contracts for services to collect direct labor hours from contractors, which
can subsequently be used to calculate contractor FTEs performing each
service or function. In addition, DOD is developing a department-wide
CMRA system to collect and house this data. DOD officials expect to
have a fully functional system available for all components to begin to use
in fiscal year 2014 and that components will be in compliance with the
reporting requirement by 2016.
One challenge identified by Comptroller and manpower officials is the
need to link contractor manpower information in the inventories of
contracted services to specific budget lines of accounting. There are
approximately 2,200 contract codes, referred to as product and service
codes, in the FPDS-NG inventory and the CMRA inventory that
correspond to specific types of services which, according to acquisition
officials, need to be linked to roughly 21 budget codes. According to an
Army official, the Army CMRA as implemented contains both budget
codes and product service codes; therefore, it is not be dependent on
DOD’s crosswalk effort. For example, the Defense Acquisition University
has mapped 17 product and service codes to one budget code related to
printing and reproduction. According to an acquisition official, the
department recently formed a working group comprised of officials from
the acquisition community and the Comptroller’s office to develop a more
complete crosswalk between the product and service codes and the
budget lines of accounting. This acquisition official also told us that formal
guidance related to the crosswalk is expected to be issued in April 2013
and modifications to financial systems to capture product and service
code information should occur in 2014.
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Finally, although DOD officials do not expect these initiatives to be fully
implemented for several years, one could expect to see incremental
improvements in the fidelity of contractor FTE projections as DOD
components compile more accurate and complete inventories and
conduct the required reviews of that inventory data.
Conclusions
DOD manages a large and diverse workforce that is tasked with
accomplishing a wide variety of missions, from shipyard maintenance to
cybersecurity. Over the past decade and in the context of fighting two
wars, both the military and civilian parts of this workforce have grown in
number, as has spending on contracted services, but the department now
faces a changing environment that includes a strategic shift and a period
of fiscal constraint that will likely last for some time. As DOD decides how
to face these changes, total workforce management and planning will be
important elements of ensuring the department’s continued ability to meet
the unique requirements of its missions. To be successful, the department
must carefully consider what critical skills and competencies are needed
to meet these requirements, and what strategies it can use to monitor and
plan for retaining those skills in its workforce. Ensuring that its guidance is
up to date would aid the department in assessing an appropriate
workforce mix, properly identifying critical functions as required by the
Office of Federal Procurement’s Policy’s September 2011 memorandum,
and mitigating inappropriate risks that may be posed by contractors
performing certain functions.
Congress, recognizing the importance of identifying the extent to which
DOD relies on contractors to help carry out its mission, has enacted new
legislative requirements over the past five years requiring DOD to collect
data on its contractor workforce and make determinations about the
nature of the activities that contractors perform, and amended legislation
to require DOD to include contractor workforce information in DOD’s
strategic planning and total force management efforts and budget
requests. DOD’s approach to including projected contractor FTE
information in its fiscal year 2013 and 2014 budget requests had a
number of limitations and DOD acknowledges that the FTE information
does not accurately reflect the number of contractors performing work in
support of DOD. The department is taking steps to improve the accuracy
of the data contained in its inventory of contracted services and enable
the inventory and required reviews to be used to project contractor FTEs
for budgetary purposes, but it may be several years before DOD is able to
do so.
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Recommendations for
Executive Action
To help ensure DOD’s workforce mix guidance reflects the current
statutory requirements for total force management policy set forth in 10
U.S.C. § 129a as well as the regulatory requirements set forth in the
Office of Federal Procurement Policy’s September 2011 policy letter, we
recommend that the Secretary of Defense direct the Under Secretary of
Defense for Personnel and Readiness to revise DOD’s existing workforce
policies and procedures to address the
•
determination of the appropriate workforce mix, and
•
identification of critical functions.
Until such time that DOD is able to accurately project contractor FTE
estimates it presents in budget submissions using the inventories and
required reviews, we recommend that the Secretary of Defense direct the
Under Secretary of Defense (Comptroller) to include an explanation in
annual budget exhibits of the methodology used to project contractor FTE
estimates and any limitations of that methodology or the underlying
information to which the methodology is applied.
Agency Comments
and Our Evaluation
In written comments on a draft of this report, DOD partially concurred with
both recommendations. DOD’s comments are reprinted in appendix III.
Additionally, DOD provided technical comments on the draft report, which
we incorporate as appropriate. We provided a draft of this report to the
Office of Management and Budget, but we did not receive comments.
DOD made two overarching comments in its agency response to our draft
report. First, DOD commented that it is concerned by the emphasis we
placed on the strategic workforce plan as it relates to the department’s
total force management and resulting workforce size and structure. DOD
stated that the plan is an integral tool in informing policies and procedures
for retention, recruitment, and accession planning and it helps inform the
demographic makeup of its civilian personnel inventory, including the
talent, competencies, education, and skills of that workforce. DOD stated
that it uses a capabilities-based approach to determine the size and
structure of the workforce needed to implement national military and
security strategies. These capabilities are based on the department’s
mission, function, and task hierarchy, and are informed by workload, risk
mitigation, and resource availability. According to DOD, it justifies its
workforce size based on mission workload, rather than competency or
skill gaps. We agree that DOD’s mission workload should determine the
size of its total workforce. However, the type of personnel—military,
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civilian, or contractor—that performs the work is dependent on the nature
of the work and circumstances of its performance. DOD is required by law
to establish policies and procedures that require the use of the strategic
workforce plan when making determinations of the appropriate mix of
total workforce personnel necessary to perform its mission, and to include
in the strategic workforce plan an assessment of the appropriate mix of
military, civilian, and contractor personnel capabilities, which it has not
included to date. While the primary focus of this report is not on DOD’s
strategic workforce plan, we have reported in this and a body of prior
work, that without knowledge of the skills and competencies that are
necessary to perform its mission workload and any associated gaps in
those skills and competencies, DOD may be challenged to appropriately
identify its current and future civilian workforce needs. Moreover, without
assurance that its civilian workforce possesses the necessary skills and
competencies, DOD may not be able to readily convert the performance
of a function from contractor to civilian personnel, should DOD determine
that it would be more appropriate to do so. Therefore, a fully developed
strategic workforce plan that addresses the statutory requirements to
include an assessment of the appropriate mix of military, civilian, and
contractor personnel capabilities and report on the results of competency
and skill gap analysis, could serve as an important resource for the
department as it makes workforce mix decisions, especially in light of
current fiscal constraints and budgetary pressures.
DOD commented that it is also concerned by the apparent lack of
reference in our draft report to the Planning, Programming, Budgeting,
and Execution process carried out annually across the department,
especially as these processes relate to the size and shape of the
department’s total force. DOD explained that the process provides
direction on spending levels, mission priorities, and strategic goals, which
then impact decisions regarding force structure and operational
capabilities, and ultimately addresses prioritization and resource
alignment. We agree with DOD that the Planning, Programming,
Budgeting, and Execution process is an important aspect of workforce
planning and decisionmaking; both requirements and resources drive
workforce decisions. We noted in our draft report that various OSD
officials stated that the workforce requirements determination process is
part of the department’s Planning, Programming, Budgeting and
Execution process to help ensure fully informed risk and cost decisions
are translated into justified and transparent manpower requirements.
Further, we noted the roles and responsibilities of the various offices
involved in developing workforce requirements, including as part of the
budget process. However, we also noted that a recently enacted statute
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requires that DOD and prioritize the attainment of a workforce sufficiently
sized and comprised of the appropriate mix of military, civilian and
contractor personnel to carry out DOD’s mission over cost. Our report
addresses steps DOD is taking to implement statutory requirements to
develop and utilize certain policies, analyses, and tools to aid in making
such workforce mix determinations. As DOD stated, the budgeting
process involves prioritization of requirements and making trade-offs
among competing needs as part of resource allocation. Therefore, having
the most reliable and accurate information is imperative for making well
informed budgetary and other workforce planning decisions.
Consequently we believe, DOD should continue to take steps to obtain
and develop the information and data that will allow it to make more
informed and strategic workforce mix decisions, such as analyses of the
gaps in skills and competencies within the civilian workforce, identification
of the functions that are critical to the department’s mission, and the
collection of more accurate and complete information regarding
contractors performing work in support of DOD.
DOD partially concurred with our recommendation to revise the
department’s existing workforce policies and procedures to address the
determination of the appropriate workforce mix and identification of critical
functions. As we noted in our report, DOD has not issued new guidance
or revised existing guidance to reflect the current statutory and other
federal requirements for total force management policy. Specifically, we
reported that DOD’s primary policies for determining workforce mix—
DOD Directive 1100.4 and DOD Instruction 1100.22—largely reflect
current statutory requirements set forth in 10 U.S.C. § 129a for DOD
policies concerning workforce mix, though there are several recent
amendments that have yet to be incorporated, such as that DOD has not
yet implemented the new requirements that determinations regarding the
appropriate workforce mix be made using the civilian strategic workforce
plan and the inventory of contracted services. Further, we reported that
the guidance similarly does not reflect federal requirements for the
identification of critical functions as required by Office of Federal
Procurement Policy’s Policy Letter 11-01. In response to our draft report,
DOD stated in its agency comments that DOD Directive 1100.4. is
currently undergoing revision and entering the formal issuance process
for signature by the Deputy Secretary of Defense. Further, DOD stated
that the updated directive will authorize and direct the revision of the
instruction. We noted in our report that OSD officials told us that they
were in the process of revising both the directive and instruction, and they
provided us with a draft of the revised directive. DOD should issue this
revised guidance in a timely manner and ensure that revisions to both
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guidance documents address statutory requirements related to
determinations of the appropriate mix of the department’s workforce and
federal requirements to identify critical functions in order for
decisionmakers to make better informed decisions regarding the mix of
personnel and ensure that the department retains enough government
employees to maintain control of functions that are critical to its mission.
DOD also partially concurred with our recommendation to include an
explanation in annual budget exhibits of the methodology used to project
contractor FTE estimates and any limitations of that methodology or the
underlying information to which the methodology is applied. DOD stated
in its agency comments that its financial management regulations and
annual budget submission guidance memorandums issued by the Office
of the Under Secretary of Defense (Comptroller) are the means used to
explain budget exhibit preparation methodologies and the guidance
directs how components are to develop and display budgetary estimates.
DOD stated in its comments that this office will strengthen the annual
guidance as improvements are made in the inventory of contracted
services. Further, DOD stated that if a component’s methodology
deviates from the process defined in the annual guidance, a footnote
explaining the deviation will be included in the contracted services section
of the Operation and Maintenance Overview book within the budget. We
recognize DOD has efforts underway to improve its inventory of
contracted services, including its use in providing contractor FTEs within
its annual budget exhibits. While footnoting any component
methodologies that deviate from DOD’s guidance is a step in the right
direction, most components use methodologies that reflect inherent
limitations that undermine the utility and accuracy of the FTE estimate.
DOD acknowledged during the course of this review that the contractor
FTE information provided in their fiscal year 2013 and 2014 budget
submissions had significant limitations. Consequently, to improve
transparency, we continue to believe that DOD should disclose the
methodologies used and any limitations thereof until such time DOD is
able to accurately project contractor FTEs.
We are sending copies of this report to the Secretary of Defense, the
Under Secretary of Defense for Personnel and Readiness, the Under
Secretary of Defense for Acquisition, Technology and Logistics, the
Under Secretary of Defense Comptroller, the Office of Management and
Budget, and appropriate congressional committees. In addition, this
report will also be available at no charge on the GAO website at
http://www.gao.gov.
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If you or your staff have any questions regarding this report, please
contact us at (202) 512-3604 or farrellb@gao.gov or (202) 512-4841 or
dinapolit@gao.gov. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this report.
GAO staff who made major contributions to this report are listed in
appendix V.
Brenda S. Farrell
Director
Defense Capabilities and Management
Timothy J. DiNapoli
Director
Acquisition and Sourcing Management
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Appendix I: Recent GAO Recommendations
for DOD’s Strategic Workforce Management
Appendix I: Recent GAO Recommendations for
DOD’s Strategic Workforce Management
GAO Product
Prior Recommendation
DOD Response
HUMAN CAPITAL: Critical
Skills and Competency
Assessments Should Help
Guide DOD Civilian
Workforce Decisions,
GAO-13-188 (Jan. 17,
2013)
Involve functional community managers and to the extent possible, use
Partially Concurred
information from gap assessments of its critical skills and competencies as they
are completed, to make informed decisions for possible future reductions or justify
the size of the force that it has.
Document its efforts to strategically manage its civilian workforce and maintain
critical skills and competencies for future reductions.
Partially Concurred
HUMAN CAPITAL: DOD
Needs Complete
Assessments to Improve
Future Civilian Strategic
Workforce Plans,
GAO-12-1014 (Sept. 27,
2012)
Direct the Under Secretary of Defense for Personnel and Readiness to include in
the guidance that it disseminates for developing future strategic workforce plans
clearly defined terms and processes for conducting these assessments.
Concurred
Conduct competency gap analyses for DOD’s mission-critical occupations and
report the results. When managers cannot conduct such analyses, we
recommend that DOD report a timeline in the strategic workforce plan for
providing these assessments.
Partially Concurred
Establish and adhere to timelines that will ensure issuance of future strategic
workforce plans in accordance with statutory timeframes.
Partially Concurred
Provide guidance for developing future strategic workforce plans that clearly
Partially Concurred
directs the functional communities to collect information that identifies not only the
number or percentage of personnel in its military, civilian, and contractor
workforces but also the capabilities of the appropriate mix of those three
workforces.
Enhance the department’s results-oriented performance measures by revising
Partially Concurred
existing measures or developing additional measures that will more clearly align
with DOD’s efforts to monitor progress in meeting the strategic workforce planning
requirements in section 115b of Title 10 of the United States Code.
HUMAN CAPITAL:
Complete Information and
More Analyses Needed to
Enhance DOD’s Civilian
Senior Leader Strategic
Workforce Plan,
GAO-12-990R (Sept. 19,
2012)
Conduct assessments of the skills, competencies, and gaps within all five career
civilian senior leader workforces and report them in DOD’s future strategic
workforce plans.
Concurred
DEFENSE
ACQUISITIONS: Further
Actions Needed to Improve
Accountability for DOD’s
Inventory of Contracted
Services, GAO-12-357
(Apr. 6, 2012)
Ensure that the military departments and defense components issue guidance to
their commands that provides clear lines of authority, responsibility, and
accountability for conducting an inventory review and resolving instances where
functions being performed by contractors are identified as inherently
governmental functions.
Partially Concurred
To ensure that the six instances we reviewed in which the Army identified that
Concurred
contractors were still performing functions it deemed inherently governmental, as
well as those at Kwajalein Atoll, have been properly resolved, we recommend that
the Secretary of the Army review these functions, determine the status of actions
to resolve the issues, and, as appropriate, take necessary corrective actions.
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Appendix I: Recent GAO Recommendations for
DOD’s Strategic Workforce Management
GAO Product
DEFENSE WORKFORCE:
DOD Needs to Better
Oversee In-sourcing Data
and Align In-sourcing
Efforts with Strategic
Workforce Plans,
GAO-12-319 (Feb. 9, 2012)
Prior Recommendation
DOD Response
To ensure that the two instances we reviewed where contractors were still
performing functions the Air Force had previously identified as inherently
governmental are properly resolved, we recommend that the Secretary of the Air
Force review these functions, determine the status of actions to resolve the
issues, and, as appropriate, take necessary corrective actions.
Concurred
To enhance insights into and facilitate oversight of the department’s in-sourcing
efforts, we recommend that the Secretary of Defense direct the Under Secretary
of Defense for Personnel and Readiness to issue guidance to DOD components
requiring that the components establish a process to help ensure the accuracy of
any data collected on future in-sourcing decisions.
Partially Concurred
To improve DOD’s strategic workforce planning, we recommend that the
Partially Concurred
Secretary of Defense direct the Under Secretary of Defense for Personnel and
Readiness to better align the data collected on in-sourcing with the department’s
strategic workforce plans and establish metrics with which to measure progress in
meeting any in-sourcing goals.
Source: GAO.
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Appendix II: Scope and Methodology
Appendix II: Scope and Methodology
To determine the historical trends and future projections of the levels of
military, civilian, and contractor personnel, we obtained relevant data and
performed trend analysis. For our analysis of historical trends, we
included fiscal year 2001 through fiscal year 2011 and, for our analysis of
future projections, we included fiscal year 2012 through fiscal year 2017.
At the time of our review, the fiscal year 2013 president’s budget
contained the most recent data available for projections and it included
actuals through fiscal year 2011 and projections for fiscal years 2012
through fiscal year 2017. For our analysis of military end strength and
civilian personnel FTEs, we relied on data from DOD’s Future Years
Defense Program (FYDP), Office of the Under Secretary of Defense
Comptroller’s Comptroller Information System (CIS) and DOD budget
documents. For our analysis of growth within type of activity performed,
we used force and infrastructure categories from the FYDP to provide
further perspectives on areas of workforce growth from fiscal years 2001
to 2011. We determined that these data were sufficiently reliable for use
in discussing historical and future trends of the military and civilian
workforce. Specifically, we reviewed previous GAO reports using
workforce data, compared military and civilian personnel levels to
published data, performed electronic testing, and discussed the reliability
of the data with knowledgeable DOD and service officials.
Further, we interviewed DOD officials to obtain their views on the major
drivers for workforce changes. For our analysis of historical trends of the
contractor workforce, we reviewed DOD’s inventory of contracted
services for fiscal years 2008, 2009, 2010, and 2011. We did not
independently assess the accuracy or reliability of the underlying data
supporting the fiscal year inventories. However, we reviewed our prior
work, which addressed limitations of the inventory data. Due to the lack of
consistent reporting of contractor FTE data, we reviewed the obligated
dollars for contracted services from fiscal year 2001 through fiscal year
2012 and the projected obligations for contracted services from fiscal year
2013 through fiscal year 2014. We relied on budget data on obligations
for contracted services (object class 25). Based on discussions with
various OSD officials, we excluded object classes 25.3 that represent
dollars obligated for goods and services from federal sources. We
adjusted the current dollars to constant fiscal year 2013 dollars using the
Fiscal Year GDP Price Index to eliminate the effects of inflation. GAO has
designated DOD’s financial management area as high risk due to longstanding deficiencies in DOD’s systems, processes, and internal controls.
Since some of these systems provide the data used in the budgeting
process, there are limitations to the use of DOD budget data. However,
based on discussions with appropriate DOD officials and our comparison
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Appendix II: Scope and Methodology
of the trends in the budget data against other data sources, we believe
the contracted service obligation data are sufficiently reliable for showing
overall trends for contracted services.
To determine the extent to which DOD has taken action to determine the
appropriate workforce mix to accomplish its mission, we reviewed
relevant legislation 1 and departmental guidance 2 concerning
requirements for DOD to carry out such analysis. We also interviewed
DOD and military service officials to assess the actions DOD has taken to
ensure it is employing the appropriate workforce mix. Specifically, we
discussed the process of categorizing parts of the workforce based on the
nature of the work they perform, DOD’s process for identifying mission
critical occupations as part of its strategic workforce planning process,
and efforts by the services to improve implementation of its total
workforce management in the future. We compared statutory
requirements concerning the processes by which DOD is to determine its
appropriate workforce mix to its efforts to date, and noted any differences.
To determine the extent to which DOD conducts analysis to identify core
or critical functions, we reviewed relevant legislation, 3 federal policy, 4 and
departmental guidance 5 concerning the process for identifying core or
critical functions. We interviewed DOD and military service officials to
explore the various ways in which “core” or “critical” functions could be
defined and reviewed documents that supported those definitions. 6 We
interviewed DOD and military service officials to determine the actions
DOD has taken to define critical functions and respond to federal
requirements. Additionally, we met with officials from the Office of Federal
Procurement Policy within the Office of Management and Budget to
1
Including 10 U.S.C. §129a and 10 U.S.C. § 2330a.
2
DOD Directive 1100.4, Guidance for Manpower Management, (Feb. 12, 2005) and DOD
Instruction 1100.22, Policy and Procedures for Determining Workforce Mix, (Apr.12,
2010).
3
Including 10 U.S.C. §§ 129a, 235, 2330a, and 2463.
4
Office of Federal Procurement Policy Policy Letter 11-01, Performance of Inherently
Governmental and Critical Functions- (Sept. 12, 2011, effective date Oct. 12, 2011).
5
For example, DODI 1100.22 (Apr. 12, 2010).
6
For example, DOD, Quadrennial Defense Review Report, February 2010. DOD,
Quadrennial Roles and Missions Review Report, January 2009.
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Appendix II: Scope and Methodology
discuss their views on DOD’s implementation of those requirements. We
compared federal policy concerning the identification of critical functions
to DOD’s efforts to date, and noted any differences.
To determine how the military departments and defense agencies used
the inventory of contracted services to inform their fiscal year 2013 and
2014 budget submissions, we focused our efforts on five DOD
components—the departments of the Army, Navy, and Air Force, and the
Defense Logistics Agency (DLA) and Defense Information Systems
Agency (DISA). We selected these components based on the amount of
their obligations for contracted services and the large number of
contractor full time equivalents they identified in their fiscal year 2011
inventory of contracted services, the most current inventory available at
the time of our review. We reviewed relevant guidance that directed the
DOD components on how to use the inventory of contracted services to
provide contractor FTE information in their budget submissions for fiscal
years 2013 and 2014. We also interviewed officials from the Office of the
Under Secretary of Defense for Acquisition, Technology and Logistics,
Office of Defense Procurement and Acquisition Policy; the Office of the
Under Secretary of Defense for Personnel and Readiness; and the Office
of the Under Secretary of Defense (Comptroller) regarding the guidance
and ongoing initiatives that will impact how the inventory data can be
used to inform future budget submissions. In addition, we interviewed
relevant budget and workforce officials from the five components we
included in our review regarding the use of the inventory in the
development of their fiscal year 2013 and 2014 budget submissions, and
we obtained corroborating documentation from the three components that
could provide it to determine the processes used to develop contractor
FTE information included in these budget submissions.
We conducted this performance audit from October 2012 to May 2013 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives
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Appendix III: Comments from the
Department of Defense
Appendix III: Comments from the Department
of Defense
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Appendix III: Comments from the Department
of Defense
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Appendix III: Comments from the Department
of Defense
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GAO-13-470 Defense Workforce
Appendix IV: GAO Contacts and Staff
Acknowledgments
Appendix IV: GAO Contacts and Staff
Acknowledgments
GAO Contacts:
Brenda S. Farrell, (202) 512-3604 or farrellb@gao.gov
Timothy DiNapoli, (202) 512-4841 or dinapolit@gao.gov
Staff
Acknowledgments:
In addition to the contacts named above, Margaret A. Best, Assistant
Director; Cheryl K. Andrew, Jerome Brown, Katheryn S. Hubbell, LeAnna
Parkey, Suzanne M. Perkins, Carol D. Petersen, Guisseli Reyes-Turnell,
Terry L. Richardson, Stephanie J. Santoso, Adam G. Smith, Erik WilkinsMcKee, and Michael Willems made key contributions to this report.
(351758)
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